A Sinclair Broadcast Group reporter uncritically spread the Republican argument that an extra $600 per week in unemployment benefits is disincentivizing people from returning to work amid an out-of-control pandemic with hundreds of reported daily deaths. The segment aired on at least 41 Sinclair-owned or -operated television stations in 34 states.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act that was signed into law on March 27 created a federal compensation program which provides an extra $600 per week to people collecting regular unemployment insurance payments from their states. As a result, most people receiving these payments have gotten more money through unemployment than they earned at their jobs. These extra benefits have also helped reduce America’s poverty rate, and experts estimate if these benefits continue for another year, the GDP would grow by an average of 3.7% quarterly. Currently, the benefits are scheduled to expire later in July, and economists are warning of a deeper recession and further economic harm if they are not renewed.
Republicans have spoken out against extending these extra unemployment payments. President Donald Trump called them a “disincentive to work,” and Senate Majority Leader Mitch McConnell (R-KY) said they are a “bonus not to go back to work” and a “mistake.” Senate Finance Committee member Pat Roberts (R-KS) also called the benefits “a disincentive to work -- to come back to work.”
On July 13, this GOP talking point was aired uncritically by Sinclair national correspondent Kristine Frazao in a report broadcast on dozens of television stations around the country, including in numerous southern and midwestern states currently experiencing coronavirus surges.
While some business owners have complained that they can’t get some of their furloughed employees to return to work or hire new people because of the generous unemployment payments, in many cases people may lose their benefits if they refuse to return to their old job without a qualified reason.
But many economists say that any effect of the extra unemployment payments on the incentive to work is small -- especially since there will be fewer available jobs -- and that letting them expire prematurely could harm the economy even further.
In a post on the Economic Policy Institute’s website, EPI Research Director Josh Bivens explained that the incentive effect of the extra unemployment payment is “truly trivial” because the economy is constrained by a lack of demand and “new job openings are all but guaranteed to be fewer than jobless potential workers” over the next few months. The Washington Post today pointed to an analysis by economists from universities in Illinois and California that “found no relationship between the generosity of a state’s benefits and the rate at which its citizens are returning to work during the coronavirus crisis.” And a June 11 article from Vox cited two different research papers from economists about the 2008 Great Recession which found that increased unemployment benefits “had a minimal effect on unemployment.”
Michigan State University economist Charley Ballard told the Detroit Free Press that cutting off the benefits will leave many “facing destitution” because there’s no job for them to return to. EPI senior economist Heidi Shierholz told Marketwatch in June, “It’s not true that there’s a pool of jobs out there that people would fill if they weren’t receiving unemployment benefits.” Moody’s Analytics economist Mark Zandi said he supports keeping the extra benefits while the unemployment rate remains in the double digits and halving them afterward. (It is currently at 11.1% but is expected to peak above 14% in the third quarter of 2020, according to the Congressional Budget Office.)
EPI’s Bivens also said to MarketWatch that cutting off the extra unemployment benefits “is a terrible idea, both for these households’ welfare and for macroeconomic stabilization.” Ohio State University economist Darrick Hamilton told the Post that letting the benefits expire “would make the recession deeper, longer and more entrenched.” Deutsche Bank’s chief U.S. economist Matthew Luzzetti said to Yahoo Money that ending the benefits would greatly hurt the economy because it’s “a critical income support” that has helped keep retail sales strong. The EPI also found that extending the enhanced unemployment benefits for another full year would grow GDP by an average of 3.7% per quarter and support over 5 million jobs.
The GOP claim that more generous unemployment payments are keeping people from returning to work ignores the elephant in the room: The coronavirus pandemic is out of control in the United States. As of July 14, more than 135,000 people have died of COVID-19 in this country. There have been more than 3.4 million confirmed cases of coronavirus infections. New reported infections have been more than 50,000 per day for the past week and are currently increasing in at least 40 states and territories and Washington, D.C. The failure of the Trump administration and many states to control the virus after the initial lockdowns months ago is forcing many businesses to close down again -- in some cases, permanently. And many businesses that shut down during the first lockdowns will never reopen.
The real disincentive for people to return to work is that they are afraid they or their loved ones will die if they go back to their jobs -- but Frazao's report instead focused on GOP talking points against extended unemployment benefits.