Jason Furman on High UI
Furman argued that the $300 a week in extra jobless benefits that was also provided by the plan was holding back a jobs recovery in some places. Furman said of the overall package, “It’s definitely too big for the moment. I don’t know any economist that was recommending something the size of what was done.”
Furman aligned with some Republican-run states, including Montana and North Dakota, that have suspended the $300 a week supplemental unemployment insurance, or UI, payments in the aim of spurring hiring.
“If I were in a state with a 3.5% unemployment rate, I’d be thinking seriously about whether paying people more to not work than to work was a good thing to continue doing,” Furman said. While it depends on the location, state of the pandemic, and economic condition, “certainly by June, July, August of this year I don’t think we need the same UI system that we had in January.”
This is from Nancy Cook, “Obama, Biden Economists in Conflict on Inflation Jump, Spending,” Bloomberg, May 12, 2021.
This is what many economists, including Scott Sumner and me, have been saying for months. I think Jason is wrong, though, about these benefits being a good idea in January.