Zombies are stalking America’s unemployed

July 28, 2020

Spencer Platt/Getty Images

By Paul Krugman

Opinion Columnist

The Social Security Act of 1935, which established the retirement system that to this day provides half of American seniors with a majority of their income, was originally called the “Economic Security Bill.” That’s because at the time the retirement program was widely seen as less important than the establishment of a national system (run through the states) of unemployment insurance.

Unemployment insurance was, however, deeply controversial; it faced bitter opposition from conservatives who claimed that it would discourage workers from seeking jobs. This was absurd given the circumstances. We were, after all, in the middle of the Great Depression, and there weren’t any jobs. But I guess we can cut the 1930s opponents of unemployment benefits some slack, since modern macroeconomics didn’t yet exist and there was still widespread confusion about what caused depressions.

There was no comparable excuse when virulent opposition to unemployment benefits reappeared in 2009-2010. There was no mystery about the causes of the Great Recession and the reason so many Americans had lost their jobs: it was all about a financial crisis brought on by financial overreach. It certainly wasn’t about lack of motivation on the part of the unemployed: in early 2010 there were 15 million unemployed workers chasing fewer than 3 million job openings.

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Yet much of the Republican Party went on the attack against the expanded unemployment benefits the Obama administration had put in place to cushion the blow of the crisis. For example, Senator Jon Kyl of Arizona declared that unemployment insurance “doesn’t create new jobs. In fact, if anything, continuing to pay people unemployment compensation is a disincentive for them to seek new work.” Actually, unemployment compensation was creating jobs, by putting money in the hands of people likely to spend it, sustaining overall demand. But conservatives couldn’t see it.

For the notion that unemployment happens because we make life too easy for the unemployed is a zombie idea — an idea that persists no matter how many times evidence should have killed it; it just keeps shambling along, eating politicians’ brains.

And now here we are, in another crisis. This time the cause was the coronavirus, which forced much of the economy into lockdown, pushing tens of millions of workers into unemployment. Desperate times — but not as desperate as one might have imagined, largely thanks to a big expansion of unemployment benefits under the CARES Act, passed in late March. A key provision added $600 a week to standard unemployment benefits.

Too many workers had a hard time accessing these benefits, largely because state unemployment offices were overwhelmed. Even so, there was much less misery than a depression-level unemployment rate would have generated without those benefits. Aid to workers also helped contain the slump, by sustaining consumer spending.

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But the expanded benefits expire this week, even though the virus-induced depression is still very much with us. Unless Congress acts, almost all unemployed workers have already seen their last check.

And Congress is unlikely to act, because Senate Republicans’ brains have been eaten by the unemployment zombie. Worrying that aid to the unemployed will make them lazy seems absurd when there are more than 30 million unemployed workers receiving benefits and only 5 million job openings. Unemployment benefits also didn’t stop 7 million workers from accepting jobs during the aborted economic takeoff of May and June, an attempted recovery cut short by the resurgence of Covid-19.

But zombie ideas never die. Republicans apparently think that they’re being generous by “only” proposing to cut supplemental benefits by two-thirds, from $600 a week to $200. In fact, that’s so cruel and inadequate that it’s hard to see how Democrats could go along.

So we’re entering a new phase of the Covid-19 crisis, this time brought on by blinkered economic ideology. And it fits the pattern. Every time you look at the havoc wrought by the pandemic and think “Well, things could be worse,” America’s right takes action to ensure that things do, in fact, get worse.

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Quick Hits

How unemployment benefits helped sustain the economy, from the socialists at JPMorgan.

Unemployment benefits don’t seem to have deterred workers from accepting jobs.

No, really, they didn’t.

We should give more honor to Frances Perkins, the mother of American unemployment insurance.

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