Tuesday, May 18, 2021

Are COVID-19 Related Federal Bonus Unemployment Payments Incentivizing People to Not Look for Employment?

Why is unemployment so high even though businesses are desperate for workers? 

Could it be because of the federal bonus unemployment payments?

Joe Biden recently stated that there is no evidence that federal bonus unemployment payments are keeping people from seeking out work.

But thinking about it, one would surely reach the conclusion that if people are getting paid more for sitting on a couch than working, there is an awful lot of incentive for many to stay at home.

University of Chicago economist Casey Mulligan has put together a chart showing empirical evidence that supports this thinking:

Bottom line: If you pay people enough when they are staying at home, they will stay at home. They only get off the couch when the incentive is too small to stay at home.



  1. Where are all these jobs? Been applying for about 20 jobs a week that I am qualified for, and 90% of the emails I have been getting from the employers are saying, "Thank you for your application. Due to the high volume of applications we recieve we will not give you personalized updates to the status of your application." And never hear from them again. A few places are kind enough to say stuff like " thank you for your application. Although your experience is impressive we have decided not to continue with you good luck!"

    1. I think it's more driven by structural factors due to 30 years of continuous displacement of labor by capital that caused a massive dislocation between jobs and available resources.