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Comment by marcell | Hacker News Reader

How do we square this with recent nation wide experience that increased unemployment benefits are causing people to sit out the labor market?

eg.: https://news.ycombinator.com/item?id=27086861

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This is more of an assumption about why people aren't returning tot work. Reality is a lot more complicated: kids can't go to school; low paying jobs are even more shitty now than before; people are still refusing to wear masks and some get violent if you ask them to; employers are doing the minimum necessary to meet code; etc. So this isn't exactly an ideal test environment.

Since some states are cutting back benefits, we get to see a live experiment. If employment numbers go up in these states, then that might be a correct assumption. But there's a real chance that employment remains low.

Labor shortages were an issue before the pandemic. Society just cheered because we called it "low unemployment."

I posted this below but the facts available actually discredit this narrative that enhanced benefits are causing people to sit out labor market participation. https://www.cnbc.com/2020/06/25/people-receiving-unemploymen...

I have personally spoken with 3 business owners who have work, would like to hire back their old workers, but those workers won’t come back because they would lose money by working.

Regarding the study you quoted, the authors note: “ One should be cautious with a causal interpretation, however, because we also find evidence that those collecting UI benefits may differ from those who do not collect benefits along unobservable dimensions. Specifically, those who receive UI benefits tend to have had higher-paying jobs than those who never apply for benefits, suggesting that they may be higher-skilled workers, on average.”

[Edit - my concern with UBI is that if a majority can continually vote for a rise in the UBI, by increasingly taxing a rich minority, eventually those tax levels will get to the point where less is produced. Even if people choose not to work if it pays more than working (my belief based on limited local experience - I certainly wouldn’t go to work if it paid less than staying at home!), it’s not relevant to UBI which is unchanged whether you work or not]

That sounds to me like the business owners are failing to pay competitively. If the unemployment benefits are higher than their wages, it's the wages that are the problem. Also, have you spoken to the ex-employees directly? How do you know they haven't moved on to better paying jobs and that's why they're not returning?

I've personally spoken to a regional manager for a chain that owns a number of small restaurants, and they recently faced a similar issue when the brass decided they would move all the drivers to wait-staff pay. They lost EVERY driver on staff when they saw their first check. They could make more money moving to Uber or competitors.

Pay competitively, or the market solves the problem for you. Yeah, there's gonna be the bad apple in the mix that would subsist on Unemployment benefits or UBI, but that minority isn't an argument why UBI is bad.

I don't believe in the argument around the concern that UBI can be raised so high by taxing the rich that it tips the scale. When 1% of the population controls such a high majority of the economy, at what point do you say that they're the problem, not the people on UBI?

thanks for your anecdotes

> But new research from the Chicago Federal Reserve throws cold water on that argument.

https://www.chicagofed.org/publications/chicago-fed-letter/2...

> June 2020 > using data from 2013 through 2019

"new research" ok.

> facts

A key difference is that the cash payments in this study were unconditional, which is pivotal to the hypothesis being tested.

Unemployment stops if you take a new job. This increases the uncertainty and risk - why take a new job that might not work out and potentially pays less money than what unemployment pays? The risk is not worth the reward in this situation.

Now if instead someone tells you that you are getting cash for 24 months regardless of whether you find a job or not, you are incentivized to find work as fast as possible because you get to keep the cash either way. If you find a job, great now you have extra money for savings, and are reducing risk and uncertainty, rather than increasing it.

IMO if this just becomes a round-about way to raise the minimum wage, I'm all for it.

I hear a lot of talking heads explaining that there's more jobs posted now than ever but people just don't want to do them. Therefore, we should cut unemployment benefits. My take on it is... how about instead, they raise wages?

It's really strange to hear the exact same talking heads decry that wages have remained stagnant for decades. It's not like the stick is the only mechanism we have to incentivize behavior.

[edit] Labor market prices are a function of supply and demand; a good way to raise wages is to constrain supply. This is a nice way to do that, IMO.

They can raise wages, and some companies already have (Chipotle). But they will pass that cost on to the consumer and now your worker's raise is negated as inflation eats it up.

The assumes the price of goods outpaces wages raised. NYC minimum wage buys you more McDonalds in NYC compared to Alabama. So the cost of goods in NYC has not risen past the gains in wages.

Inflation is actively managed by the Fed, they can simply constrain supply of money. There's almost no world in which this doesn't happen anyways, given the macroeconomic climate.

> How do we square this [...] increased unemployment benefits are causing people to sit out

To start with, while it's a current talking point, it's not at all clear that this is actually what's happening.

Giving people cash unconditionally would be much better than requiring them to not have any job . The former encourages recipients to retain their jobs or even look for higher paying jobs, and handles corner cases better(single mom working two jobs ineligible for unemployment on losing one).

There is an even better thing.

If I give everyone $1k/m for free, I know a good percentage is going towards housing, food, and transportation.

Why not just control those items more? Why give out cash when we know all the landlords will just up the rent accordingly?

Better to have good housing construction policies, good food distribution policies, and transportation as well.

Then we can give out credits to everyone.

> Better to have good housing construction policies, good food distribution policies, and transportation as well.

City governments are ripe for corruption. They make bad choices.

I think it's quite hard to separate the exogenous shock of the pandemic from how people are looking at the nature of their job.

There's entire industries that got upended or closed overnight. If it was as 'simple' as just a recession or layoffs, I think that would be more of a controlled test.

But just off the top of my head, restaurants, grocery stores, retail, child care. Assuming people would just come back sort of implies that everything is the same, but it is most certainly not. Anecdotally, I've heard from friends who are nurses that feel severely burnt out from this. The pandemic sort of flipped proverbial monopoly board, and I don't think you can restore the game to the exact state it was in.

That was mostly in food service and hospitality, wasn't it? Pay is traditionally lousy, working conditions are bad, and there's a pandemic doing on. Can't fault anyone for not going back to that!

There was also a pandemic, hard to compare

Probably because it's one town.

Imagine if an entire country did this, or the entire world. The base currency would quickly become worthless because everyone would have it.

This is kind of like saying "can't we all just get along?" because a kindergarten class somewhere in Minnesota has kids who don't fight.

By considering employers spend billions of dollars a year lobbying to keep the power imbalances.

Think about the efforts Amazon and Walmart go to keep their employees from unionizing.

Consider how Uber misclassified workers as contractors to avoid providing legal benefits.

Or how every year before the pandemic there was push back on not just raising minimum wage laws but efforts to completely repeal them.

This goes back in history to unsafe working environments, overtime, health insurance, workers comp, etc…

Stock markets are at record highs, companies have record profits, economic inequality is at all time highs…yet businesses continue to push the narrative they pay to much to workers and the would rather strip all Americans of benefits, who really need them, just so they can fill a handful of jobs at below market rates and below living wages.

Quite honestly, is that even a bad thing? People who are sitting out of the job market probably were not good at their job, or hated it anyways. If they're happier (and not "taking" the jobs of others) then that seems fine. Especially considering that the other 99% who do go back to work also benefit.

NPR had an expert on unemployment and unemployed people on this morning who pointed out that this narrative is not supported by facts. Instead, the people who received these enhanced benefits have searched for jobs at a higher rate than those without.

https://www.marketwatch.com/story/people-search-less-for-job...

That's just cheating. They're comparing people who have been unemployed long enough to lose the benefits to the recently unemployed. Obviously the former group will have underrepresented the people most independently inclined to look for a job, because more of those people will have found one before becoming members of that group.

You have to qualify for the expanded unemployment benefits but I suppose that's a detail to be overlooked if it's inconvenient.

"You have to qualify for the expanded unemployment benefits" is exactly the point. The criteria for qualification causes a disparity between the experimental group and the control group, which invalidates the experiment.

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