Unemployment declining faster in states that are cutting off $300 benefits
businessinsider.com
businessinsider.com
"How much human capital is consumed by low productivity enterprises leveraging the immobility/lack of choice present in impoverished workers? If workers had mobility/safety would they move to higher productivity work?"
"Should the minimum wage for workers be equal to the wage where the government doesn't need to provide benefits? If it's not, why does the government subsidize low productivity employers?"
Labor prices only exist in a free market so long as there are sufficient regulations to prevent exploitative labor arrangements and starvations. Theoretical arguments centered on bid/ask spreads don't quite apply in a world where there are life and death consequences to the market not clearing.
The government isn’t subsidizing low productivity employers, its subsidizing people whose labor isn’t valued in the market. Mostly, those subsidies go up if people aren't employed compared to where they would be if they were employed at low wages, so the employer is subsidizing the government support system, not vice versa.
The government benefits from increased employment, even if some subsidy must be provided.
Those two things can be true at the same time!
However the subsidies distort the labour market and incent low productivity labour.
One question is whether raising minimum wage beyond the subsidy level would cost more in increased unemployment than the value of the subsidies provided.
That's a deeper question about labour market structure and demand, and the answer might be different in different places and times.
We can tell the difference between high productivity / low wages and low productivity / low wages because the latter will tend to shed jobs on subsidy withdrawal while the former will tend to pay more.
Workers with high productivity but low wages (let's say, in an factory where the owners make a lot but the employees are easily replaceable) are still a good deal at a legislated higher price, the owners just get less of the surplus.
Another way to think about it is that while productivity doesn't set wages, it represents the ceiling of what you'd be able to pay. Those marginal, low productivity, "can't afford to pay you more" jobs are what you lose when you remove subsidies (or increase minimum wage).
Hence, subsidies targeted at low wage earners disproportionately incent low productivity labour.
I'm not sure I follow. How does the government "subsidize low productivity employers"? What does "low productivity" employers/work even mean?
Factory A is a high productivity (per employee) employer and factory B is a low productivity employer.
Yes, B employs a lot of people but in a certain sense it is also wasting their productive lives.
Re: subsidies, if you pay workers very little their income may be supplemented by government assistance such as food stamps. Some employers rely on this in the sense that many of their employees would not be able to afford to live without this assistance.
Some people believe that the clearing price for labour would be higher without this assistance (because the pool of people willing and able to work without it would be smaller). This does seem a fairly logical matter of supply and demand. However since it seems inhumane to cut off that support they generally advocate raising the minimum wage to incorporate the subsidies that would be provided instead.
We're not all forced to work jobs that pay less than a living wage, in dangerous or dehumanizing conditions, without benefits like retirement or health care, with the possibility of being terminated without warning by an algorithm. But cutting off unemployment benefits leaves many people with few, if any, other choices.
This is a wonderful Asimovian ideal. Alternative future: we automated many people out of jobs and they are left in the cold because we don't prioritize re-training and social services.
id expect a healthier wage in states pushing employers to raise their poverty wages, skmilar to an artificial minimum wage.
The exceptionally obvious solution is an income credit that artificially increases their wages beyond what the market is paying for their low skill labor.
If the Democrats knew what they were doing they would have taken care of this decades ago instead of constantly fighting for higher minimum wage adjustments. Their lack of understanding of economics and business is astounding and terrifying. You can set the minimum wage at $5 while setting an income credit instead. The minimum wage cuts off unskilled labor at the knees; if your labor is only worth $5/hr and the minimum wage is $15, you're screwed big time. You're frozen out of the labor market. It cultivates a permanent underclass stuck on welfare in a poverty cycle. If you leave the minimum wage low and increase an income credit, you don't suffer the problem of labor being excluded from the market. Someone that has labor worth $5/hr in the market, can then earn $15 thanks to the credit that fills in their wage.
This is how you fill out the labor force while simultaneously boosting wages. The minimum wage is a regressive approach - it harms the lowest value labor the most - as is paying people to stay home. The dumbest thing a nation can do is pay people to stay home. There are always superior alternatives to that approach.
Not to mention, people work under the table all the time.
That said, the wage credit idea isn't bad either. The problem is that now the government is just subsidizing companies that pay low wages with no way to recoup even part of the subsidy. You're basically opening a firehose of welfare from consumers to employers.
It's hit or miss as to whether a $15/hr job puts people on a good long-term footing in their career. Putting a person in a $5/hr job that the government tops up will likely just create lifetime wage subsidies as we see today via food stamps/welfare etc.
> The number of individuals who received unemployment benefits decline by 13.8% by the week ending June 12, compared to mid-May, in states where governors explicitly said that enhanced benefits would end in June, based on an analysis by Jefferies LLC economists.
>This figure compares to a 10% decline in states that are ending benefits in July, and a smaller 5.7% decline in states that intend to keep the benefits until the funding ends in September.
As we can see it’s referring to unemployment claims, not the overall rate. So we don’t know whether people are workin or not.
That said, I would suspect that it is indeed due to more people going back to work. But there is again another reference to that in the article:
> In May, the Missouri's unemployment rate was 4.2%, below the national average of 5.8%, according to data from the Department of Labor.
Missouri seems to have been back to more or less full employment, or around there when it cut off the extra benefits. What i think a lot of people are missing is that the confounding factor here is that political choices like ending the extra benefit are correlated with lighter lockdown policies. It’s likely that these states have already been ahead on re opening as well. measuring the effect of ending the unemployment benefits themselves requires looking at that data as well.
Shocking.
And that's ok. When I work, I also provide value for others and they give me valuable things in return - like money for food.
Is it indecent to expect people to work to pay for things?
AFAIK there is no paperwork for this survey. They call people up and ask a few questions to classify you.
Critics have accused the fed govt of irresponsibly rolling this out as the economy has rebounded, and now you have many states where businesses are struggling to find workers who want to apply for these low income jobs because unemployment + 300$(fed govt bonus) + tax benfifits > low income job. So basically 21 states stopped giving unemployed people that extra 300$, and surprise surprise, american workers are rational and more of them elected to go back to work compared to the states that still distribute that 300$.
Basically this isnt surprising, but people on the far right want to gut bloated unemployment programs and far left wants universal income + bigger welfare for nonemployed americans, and this is playing out in Washington DC now and in states accross the US who arent one party states.
There are a number of reasons why someone loses unemployment eligbability, time being one of those as you alluded to. Varies state by state.
I beleive some states like NY and Cali have extended unemployment benfifits to like September, other states probably vary.
I passed by a giant sign next to a McDonalds offering $17/hr starting wage for McDonald's employees at a roadside operation in Western Mass.
Mcdonalds + Amazon wont be a victim of minumum wage laws, they advocate for high minumum wages, as less productive chains and small businesses with smaller margins will have to die off to allow for more mcdonalds and amazon.
It is sad how expensive some parts of the country are, and the minimum wage "should" be higher, but ive seen economists say raising minum wage hurts low income earners looking for their first job (disproportionatly bipoc people), increases prices for everything, increases govt beurocracy, and simply doesnt work as a simple fix.
Point being: we need to stop thinking of $15/hr as a high hourly wage.
"The number of individuals who received unemployment benefits decline[d] by 13.8% by the week ending June 12, compared to mid-May, in states where governors explicitly said that enhanced benefits would end in June, based on an analysis by Jefferies LLC economists."
and:
"In May, the Missouri's unemployment rate was 4.2%, below the national average of 5.8%, according to data from the Department of Labor.
Missouri ended enhanced federal benefits for unemployed state residents as of June 12, making it one of the first states to take the action."
I do not know the exact numbers for this.
https://www.bls.gov/news.release/empsit.t15.htm seems to be the best resource I can find at the moment for the ones I'm thinking of, it doesn't really define them very exactly though. I'm sure they're defined _somewhere_.
https://www.nytimes.com/2021/06/27/business/economy/jobs-wor...
I think this article also dismisses that even if there are millions of job openings that doesn't mean they pay a living wage or a wage that can sustain a family or prepare for retirement. Coming out of 2008 we lost a ton of reasonable pay positions for multiple part time or gig economy work that crushed so many of my college peers.
Simply driving down unemployment is a false method of tracking economic progress or recovery.
Roberson's story at the end is exactly what I'm getting at. Lose a reasonable $26/hour and now stuck with a $7.25/hour job at best is not going to help America recover but only demonstrate employers can lobby to abuse workers all day long.
Of course if you kept your driver's license in CA and just happen to physically be in Texas without telling your employer that, then it'd be CA.
I don’t think this is fully correct. My understanding is that it’s about where the work is being done, not the residency.
For example, many businesses in Portland, OR employ residents of Vancouver, WA (right across the river). When COVID hit and those WA residents became remote employees, many Portland businesses had to become registered in WA because that is now where they had employees located.
In practice however, nomadic income only typically gets reported for high income employees like professional sports players or entertainers who earn large amounts of publicly identifiable income in different states throughout the year.
For an employee to file for unemployment in a state, they would first need to show residency in that state. For example, you can't pass through CA for a week and file for unemployment there.
There’s a bit more to it than that. An employee doing work in a location is a possible back door way of establishing nexus in that state for the business. Amazon, for example, knew they had a target on their back so forbid employees from even turning computers on in some states.
I can't figure out if it is the company, yourself or the state, or a mix of all three involved in unemployment. And does it make sense to use the state you physically live in or the state where the company is?
I think with remote work and different states offering different amounts, this can all be gamed for maximum benefits.
You’re only eligible to apply for unemployment in states where you worked and meet the eligibility criteria.
So in that case, no matter what bonuses WA is offering, you only paid into the OR system so that’s the one you’re eligible for.
There’s no “shopping around” because (for the most part) you’re only working in and paying into the system of a single state.
This link might help:
https://www.cbpp.org/research/introduction-to-unemployment-i...
Contrary to what the other response stated, it does not matter where your DL address is; it matters where you are actually resident (generally, physical residence). If you were to claim CA unemployment using a CA DL but were residing in TX at the time you were employed, you would be committing fraud. Note that if you hadn't told your employer that you had moved to a different state, generally they can terminate you "for cause", meaning that you would not be eligible for unemployment in either state.
And with TX not having income tax, it's almost like your CA income tax pays into the benefit pool...
Also, unemployment is funded by employers, not income taxes, using an insurance-style scheme.