New Report: Unemployment (Over)compensation
As the COVID-19 pandemic struck the United States in 2020, Congress began shotgunning money out over the country in unprecedented ways.
One was an extraordinary hike in unemployment benefits — an extra $600 a week. Many Wisconsinites were already receiving as much as $370 per week, bringing their total payment to almost $1,000, more than many normally earned.
Employers short of workers swiftly pointed out that, for many employees, this meant returning to work could lead to an actual cut in pay. As companies struggled to open up again, commentators wondered how much of a severe labor shortage was caused by this disincentive to work — an “implicit tax,” as economists call it.
Our latest report finds that extended supplemental benefits really did deter people from returning to work — and the authors were able to put a number on the harm done to Wisconsin. We now know the real impact of the governor’s decision to extend supplemental benefits even when so many other states had decided enough was enough.
If Wisconsin had opted out of the supplement in June, the total unemployment would have dropped faster than it did. By September, we estimate, there would have been about 28,000 fewer unemployed.
Read the full report here.
| 
