Today's @bopinion post is an ode to Pandemic UI, the boldest and most successful U.S. economic program in many decades. https://www.bloomberg.com/opinion/articles/2020-09-08/u-s-renewal-of-pandemic-jobless-benefit-is-crucial-for-workers-economy?sref=R8NfLgwS

The $600/week benefit moved the needle on disposable income like nothing else in recent history. That's how big and bold it was!

It was so successful that by some measures, poverty rates actually FELL during lockdowns.

https://bfi.uchicago.edu/wp-content/uploads/BFI_WP_202084.pdf

And almost everyone was still able to pay their rent!!

Ahh, but this super-generous government benefit must have kept people out of work, right?

Well...no! Somehow the labor market held up just fine, even though we paid people not to work! https://twitter.com/ernietedeschi/status/1285688902129528832

Economists almost all agree.

But WHY??

How can you pay people to stay at home without hurting the labor market? How can this be?????

Economic theorists have some answers. Corina Boar and @Simon_Mongey are on the case.

http://www.simonmongey.com/uploads/6/5/6/6/65665741/boar_mongey_cares_act_2020.pdf

The first key thing to realize is that JOBS ARE HARD TO FIND. You've got to look around for a long time. So giving up a job or turning down a job offer, in order to receive Pandemic UI, will cause you a big risk and a big hassle in the future!

The second factor is that jobs tend to pay you more if you've been there longer. Give up your job, and you have to start at the bottom once Pandemic UI runs out!

So, note that both of these things depend on the fact that Pandemic UI is TEMPORARY.

People know it's not going to last forever. If you give up a job or turn down a job offer just to get a few months of Pandemic UI, you'll be in trouble when it ends!

Workers know that Pandemic UI is going to end. In fact, it ended once already! There's no WAY this program is going to be permanent. The pandemic will end, Republicans will find some way to cut it off, centrist Democrats will start worrying about deficits, etc. etc.

So because everyone knows that Pandemic UI can't last for a long time, the economists' model STILL HOLDS TRUE.

Which means WE CAN DO SOME MORE PANDEMIC U.I. IF WE WANT TO!! It won't hurt the labor market!!

We shouldn't be afraid to renew Pandemic UI for a few more months! It's the most successful U.S. economic policy in many decades, and it won't hurt the job market.

I only wish the people in Congress were listening.

(end) https://www.bloomberg.com/opinion/articles/2020-09-08/u-s-renewal-of-pandemic-jobless-benefit-is-crucial-for-workers-economy?sref=R8NfLgwS