2min chapter

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A Strange Moment for the U.S. Economy

The Daily

CHAPTER

The Third Theory of Unemployment Benefits

Some argue that unemployment benefits are disincentivizing workers from working. Others say it's more profitable for people to stay home and collect the benefits than take a job. The federal government is providing three hundred dollars per week in Unemployment Benefits, on top of whatever they get from their normal state benefits.

00:00
Speaker 2
So let's talk now about the people who believe in your third theory, in our automotive metaphor here, that we need to ease off on the gas and stop driving like a crazy person. What do the people who believe that say is the explanation for this worker's shortage?
Speaker 1
So the big thing that they point to is unemployment benefits. During the pandemic, we have expanded unemployment benefits in all sorts of different ways. We've made them available to people who don't usually get them. We've allowed them to last longer, and we've made them more generous. Right now, somebody whis getting unemployment benefits is getting three hundred dollars a week from the federal government, on top of whatever they get from their normal state benefits. And so tha the claim that you'll hear from many businesses and from some economists is that we can't get workers right now because unemployment benefits are disincentivizing them from king, that
Speaker 2
it's more profitable for them to stay home and collect unemployment benefits. Than it would be for them to take a job.
Speaker 1
Yet, look, there are sort of harder and softer versions of this argument, right? The sort of hard version is, it is literally more profitable for some people to stay home. They are sitting on the couch, playing video games and getting unemployment benefits instead of working. The sort of soft version of this is, look, it may not be that a lot of people are just flat out saying thy're not going to work, but this makes it easier for them to be pickier about jobs, to hold out for better pay, to wait a little bit longer. And so thathereare a lot of people who might theoretically be willing to work, but they're not rushing back to work right now because these benefits make it easier.

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