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Paid Not to Work

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Kerby Andersonnever miss viewpoints

If you take a political science class, your professor will probably talk about how often government policies have unintended consequences. We have before us right now a perfect example of that. But let me hasten to add that unintended consequences don’t always mean unexpected consequences. A number of US senators saw this coming, but Congress did not listen.

Jamie Black-Lewis owns two spas in Washington state. Although her businesses were closed, she was ecstatic that she qualified for two small-business loans through the Paycheck Protection Program. She was eager to share the good news with her employees. They did not take it as good news. She said there was a “firestorm of hatred about the situation.” They calculated they would make more by not working, considering that the CARES Act added an additional $600 a week benefit to their existing unemployment benefits.

Kurt Huffman, owner of restaurants in Portland, Oregon, had to lay off hundreds of workers. But he was able to adapt with takeout and delivery. He needed to hire back some of his employees. It didn’t go well, and so he did the math. A starting wage for a line cook is about $640 a week. Oregon’s unemployment offers about $416 per week. But the additional $600 federal bonus means that same worker would make $1,016. Why would anyone take a pay cut to go back to work?

This doesn’t mean that workers are lazy. They are just making rational decisions based on the economic incentives created by Congress. A number of Republican senators like Ben Sasse, Lindsey Graham, Tim Scott, and Rick Scott saw this coming. When they raised a concern about the bill in Congress becoming a disincentive to work, they were criticized in the media and voted down in Congress.

When you pay people more not to work, what do you expect? The unintended consequence is that people will stay home and make more money.

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