This story isn’t intended to suggest that Americans who’ve lost work, due to no fault of their own, during the pandemic shouldn’t have a helping hand. The United States created social programs, like unemployment benefits, for the purpose of providing safety nets for those who are in a time of need. Of course, frequently over the years, these programs have been abused as a form of dependence rather than the intended safety nets. This has often been encouraged by politicians more interested in retaining their political power than the best interests of the country. Thus, programs have been used as a way to attempt to “buy” votes. What we’re witnessing with unemployment benefits recently paid and currently being debated in Congress is a quintessential example of this.
All employees laid off during the pandemic, both full and part-time, received the extra $600 weekly payments from the federal government in addition to the state benefits provided. The average state unemployment benefit paid equaled $233 weekly for a total of $833 of weekly unemployment benefits. That’s an annualized benefit equaling $43,316. Now, according to the Federal Reserve, the median personal income across all employees was $33,706 or $648 weekly heading into the pandemic.
That means the average person on unemployment benefits received $185 more weekly through July than they earned while working. Another way of looking at this is that those unemployed received an average 29% raise to not work at the expense of taxpayers. Please don’t misunderstand, I don’t blame anyone who took these benefits, all eligible should have. I also understand that for some it still doesn’t come close to offsetting the income lost. I do blame the politicians who irresponsibly tossed around taxpayer money like it was free. On balance, a full 75% of those on unemployment over the prior three months received more unemployed than they did while working. This would create an inherent disincentive for many not to return to work as soon as possible. It’s the antithesis of a safety net. It’s why it’s also wrong to continue with benefits anywhere close to that level. Based on this data the maximum federal supplemental benefit should be $415 weekly, which equals to the lost income while employees were working.
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