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**AUGUST 16, 2021**

Kuttner on TAP

No, Unemployment Benefits Are Not Discouraging Work

****

About this time every August, my wife and I head for the Berkshires to
listen to music at Tanglewood, catch some theater at Shakespeare &
Company, and hike these gentle hills and woods. We also treat ourselves
to some of the local eateries.

This year, due to the pandemic, the cultural venues are operating at
about half capacity and so are the restaurants. We've heard more than
one owner complain that they can't get enough help-due to the damned
government paying people not to work.

Except that it ain't so. Arindrajit Dube, an economics professor at
the University of Massachusetts Amherst, reviewing census data, looked
at the 25 states that ended benefits early
,
in June. Dube found that the share of adults with a job in the states
that cut benefits actually fell by 1.2 percent.

A recent piece by Reuters

quoted business economists who came to similar conclusions.

"We find only a marginal effect" of the unemployment benefit cuts on
labor supply and on employment, according to Gregory Daco, the chief
U.S. economist at Oxford Economics. "As such, benefits discontinuation
may end up doing more bad on the personal income ledger than good on the
employment ledger of the economy." Goldman Sachs economists echoed the
findings.

Here in Western Mass, restaurant owners when pressed will admit that
much of the scarcity of help this year is actually the result of
pandemic uncertainty scaring off college students, who usually make up
much of the summer waitstaff. Last spring, when it was not clear what
would open and for how long, college students were understandably
hesitant to commit.

It's true that local restaurants are now having to pay more to attract
help. One owner indignantly told me that he was paying $15 an hour.

Well, yes. Isn't that the point of unemployment comp in the first
place-to prevent unemployed people from having to work at desperation
wages?

~ ROBERT KUTTNER

Follow Robert Kuttner on Twitter

Robert Kuttner's latest book is
The Stakes: 2020 and the Survival of American Democracy
.

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In the Budget Scramble, Don't Forget Worker Rights

They're as important in a democracy as voting rights. BY ROBERT
KUTTNER

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