I personally know at least 2 people that admitted this and said they would wait until unemployment benefits expire to seek work.
So they just import and abuse poor workers from Eastern Europe[1] living and working in illegal conditions, who have no better options back home than to do back-breaking work for what would be peanuts in Germany but somewhat-half-decent money back home.
The local authorities know about these illegalities regarding foreign worker exploitation but turn a blind eye as this keeps the meat and vegetables cheap in the supermarkets for the very price sensitive local consumers, since the farmers are all under the pressure of the big supermarket chains to deliver produce on time and on razor thin margins so they have no other way but to find cheap exploitable workforce to stay competitive or lose their contracts.
Welcome to 21st century European capitalism.
In the US, there are also places where the minimum wage is $7.50 (the federal minimum wage) and things also cost far less. The US in general is a much more diverse place than a place like Switzerland, and yet it’s all governed by the same federal law, which paid expanded unemployment benefits the same regardless of where the person is located.
The average US small-business owner makes around $70k/year, less than most devs: https://www.cnbc.com/2020/02/28/this-is-how-much-to-pay-your... . It's not like small business are rolling in cash. The only way for them to pay more is either to raise prices (meaning everything costs more) or hire fewer people. Would you be willing to patronise a shop that charges 50% more for coffee than the shop next to it because it pays its workers more? I'd bet not.
Switzerland is a very rich country, so all wages are higher; shops can afford to pay more.
I'm not a business owner, but from a customer's point of view, I regularly settle on my favorite stores for reasons other than price. As long as it's not exorbitantly priced (e.g., $8 coffees in a small city), I prefer places that have good atmosphere, offer quality products and service, and become part of the community. A coffee shop that displays and sells works from local artists is better than a Dunkin Donuts.
My wife chooses where to shop and eat by price, and I hate it. We end up saving some money but often not enjoying it (cheap batteries that need frequent replacement, foul-tasting marinara, etc.). No matter how thrifty we were, I just see it as paying to be less happy.
There is a market for McDonald’s coffee as there is a market for $20/cup coffee.
If we're living in a world where prices are inelastic, then labor supply will also become inelastic. Presuming that successful businesses aren't trying to hire for the sake of hiring, then it's almost certain that they are raising prices to meet demand.
Why do you think people shop at stores like Publix or Whole Foods when Walmart has lower prices? Because those stores (even though they still treat their employees--sorry, "associates" poorly) have better service, due to better pay.
The thing that people seem to forget is how higher AGI = higher taxes. People are just getting back some of what they’ve paid into the system already. Would you expect to get full coverage insurance on a new Ferrari, with premiums based on the value of that, then get compensated by the insurance for the value of the cheapest car on the market in the event that it was stolen?
Edit: minor typo
OP's question was "why don't you pay more? That will make people want to leave unemployment". My response was "higher wages will not incentive people to leave unemployment because they would be receiving unemployment that scaled with those higher wages".
If you have a chain of A owing B $2k/mo and B owing C $2k/mo and so on from A to Z, then if A through Y's sectors all change, Y still needs to pay Z, meaning X needs to pay Y, mean W still needs to pay X, and so forth. Meaning that even though nobody's paying usury rates, nearly everyone is still heavily constrained in terms of how they can adapt to change. And so they're incentivized to push the world towards whatever scenario they planned for, not because they like that scenario a priori, but because that's what they planned for.
tl;dr Credit lets you play time arbitrage, which sets up bad incentives when things don't go according to plan.
We shouldn't have chains of people owing money to each other, we've seen what happened in 2008. Prohibiting lending money with interest will not allow such chains to form.
I think you wouldn't. A family member runs a small shop and unemployment plus additional COVID benefits ended up being very close to wages of some employees, who did the math and decided that 90% of the pay for 5% (not zero due to expectations for unemployment) of the work.
There’s a good article somewhere that looks into that specific question and provides some data and weighs alternative explanations. I wish I could find the link.
Alternatively we could all just debate it without any of the data from the article. I’m pretty sure I know which option is most popular.
Yes, you can restructure income tax levels so that people get to keep most of their additional income, and then you'd have to tax the remaining people more heavily to compensate. But if that's the solution, why don't we do that today?
This argument shows that UBI doesn't solve the incentive problem. It can only be solved by keeping welfare benefits significantly lower than minimum wages, which means lowering one or raising the other. This isn't logically impossible, but it's matter of political feasibility. That's true of UBI also.
I do think it's important to point out though that you lose unemployment if you work, so there's direct incentive there.
You stop getting the benefit if you get a job, you wouldn't stop getting UBI, so there's no negative response to being employed.
If UBI just replaces unemployment, how does that calculation change? You still have enough money to live on you still don't want to do the job being offered?
Unless UBI is sufficiently low that you need a job to survive, in which case... is it UBI?
A UBI that works as e.g. a negative income tax would definitely work.