Extended unemployment benefits finally end.

 

Extended and enhanced unemployment benefits put into place for the Coronavirus pandemic are finally expiring. Fox Business. Up to 7.5 million workers will lose all of their benefits while an additional 3 million will lose their extra $300 a week bonus. The benefits were put into place due to the pandemic but had a major effect on employment. Despite their being 5.5 million people on unemployment right now there are a record setting 10.1 million open job postings. However, the end of these programs will likely cause consumer spending to decrease. Democrats have made some statements that they will try and push through more aid through their massive infrastructure bill, but that seems unlikely to happen. 

My Comment:

This is long overdue as far as I am concerned. These massive benefits incentivized people to simply not work. Why would anyone want to work when they could get their normal unemployment payments plus an extra $300? 

And it's clear that a lot of people simply did stop working. It's incredibly obvious if you have been paying attention. I have seen a ton of stores that simply aren't open because of lack of workers. I've given up on going out to eat due to the remaining servers being overworked and not able to keep up with demand, assuming that the restaurant is open in the first place. And at my own business we had a difficult time filling open positions in our department despite having decent pay and benefits, to say nothing about the actual line jobs. 

Getting rid of these benefits will encourage some of these people to go back to work, just like ending the eviction moratorium will encourage some of these people to actually pay their rent. After all, people like having money after all, and will need to work in some fashion to get it. 

But I do worry that a lot of these people will simply drop out of the economy completely. Some of these people will be, for example, a wife that doesn't want to go back to work and can rely on her husbands paycheck.. Some might retire and some may even try to get on some kind of disability. 

Others though might be convinced that the status quo has changed and that simply won't have to work anymore. Already the Democrats are trying to push through another extension and some might take that as a sign that things aren't actually going to change. These people will likely be sorely disappointed and will end up further into debt. 

There will be negative consequences to ending these benefits. Obviously consumer spending will likely slow as people stop getting free money. Given that spending is already anemic that's not going to be a good thing. People are already holding onto their money due to high inflation, economic uncertainty  and Coronavirus restrictions. That is not going to be good for the economy. 

On the other hand, our spending was not sustainable. These programs could not continue indefinitely. The best time to end them would have been this spring when the virus slowed down, but the next best time is now. At some time we had to rip the Band-Aid off. 

I do think that the events of the past year and a half show that the idea of universal basic income will never take off. Instead of being an economic benefit, our stimulus and unemployment benefits caused a massive labor shortage. People simply would not do the jobs on the lower end of the economy if they had a choice not to. 

Finally, I do think that this has had one obvious economic benefit. Most of the lower end jobs have had major pay increases. I haven't seen a fast food restaurant that advertises wages under $10 an hour for a long time and one of the nicer ones around here, Culvers, has a starting wage of $15 an hour. That has been a demand for the left for a long time and they finally seem to be getting it. Of course these wage increases have been utterly destroyed by the inflation we have suffered in the past eight months, so it comes out as a wash...