Unemployed workers in Oregon and many other states qualify for the full $600 a week if they lose as little as 10% of their pay due to coronavirus, not only if they completely lose their jobs, according to the U.S. Department of Labor.
So Oregon’s largest district has hatched a plan to have its employees work four days a week for the remainder of this school year, and it is banking on its unionized employees agreeing to the deal. Employees would lose 20% of their pay from the district but would have that more than backfilled by receiving 20% of the weekly state unemployment benefit to which they are entitled under the state Work Share program plus the full $600 weekly federal match.
That means a teacher earning $88,000 – the top rung on the pay scale, where teachers who have master’s degrees and at least 12 years of experience are positioned – would lose about $460 a week in district pay. But that teacher would qualify for $600 a week from the federal rescue package plus about $130 from the state unemployment system. So weekly gross pay could rise from about $2,290 to about $2,565 – a raise of nearly 12% for doing less work.
Or at least that is the district’s concept, and state and federal rules appear to permit that.
This is from Betsy Hammond, “Portland Public Schools plans to furlough teachers, principals, other staffers 1 day a week–but they’d make more money, not less,” Oregonian, May 2.
HT to Dale Courtney, a student of mine at the Naval Postgraduate School in the 1990s. Dale’s aware that I’ve been writing about the absurd $600 per week federal subsidy to people who are unemployed, here and, earlier, here.
P.S. A friend, in response to my Robert Murphy interview on this, writes on Facebook:
My 26 year old daughter is working full time. My 24 year old daughter had two jobs, was laid off, and now earns $1,000 weekly, more than when she was employed. This is crazy. It’s causing a rift in this generation and tremendous resentment. They tell me half their friends now make more money unemployed.
READER COMMENTS
Dale Courtney
May 10 2020 at 3:44pm
My company is currently building a new corporate headquarters.
In spite of the fact that construction was allowed to continue in Idaho during the coronavirus lockdown, we have had subcontractors magically out of work because they make more money on unemployment.
It’s hard to compete with unemployment pay that high.
As David points out elsewhere, they likely won’t come back to work until 1 August, or later if the unemployment benefits are extended.
Thomas Hutcheson
May 10 2020 at 5:28pm
Definitively not well crafted legislation.
Too bad instead of coming up with something so sub-optimal on the fly, Congress did not already have in place a nationally funded (but not with a wage tax) unemployment system that replaces a high percentage (but less then 100%) of lost income plus the unemployed person’s cost of health insurance.
Bad policy is sometimes the open door for worse policy. We’d better hope that we replaced the plethora of “green energy” subsidies with a tax on net CO2 emissions before some environmental event unleashes a “green new deal” on us.
Matthias Goergens
May 11 2020 at 5:27am
Why does the government even need to be involved in unemployment insurance?
Why can’t this be insured privately?
Thomas Hutcheson
May 11 2020 at 9:59am
Correlated risk. The same reason that business interruption insurance does not cover businesses that fail see profits fall below zero in a recession or mortgage contracts are not written contingent on unemployment.
Secondarily, can the government credibly commit not to assist those who do not purchase insurance?
robc
May 11 2020 at 10:39am
It can be private. Although SafetyNet.com stop offering new policies as of August of last year and I think they were the last available option.
robc
May 11 2020 at 6:42am
If I understand your last paragraph, it is better for us to go ahead and surrender to Japan rather than risk losing a war to the Axis powers.
BC
May 10 2020 at 8:08pm
“It’s causing a rift in this generation and tremendous resentment.”
I wonder whether this will be the tonic that finally cures what had been a growing fever among the young for “free” this and “free” that. (By “free” we mean taxpayer-provided.) Socialism, both Western and Communist varieties, was largely discredited of course in the 20th Century due to its own ludicrousness. There has been a Great Forgetting in recent years and, in the case of young people, perhaps a Never Saw First Hand. Now, they are seeing first hand the unsustainability of Lockdown Socialism.
P Burgos
May 10 2020 at 11:35pm
The unemployment benefits are likely to run out long before the economy recovers. So most of the folks now receiving unemployment are going to be broke because they cannot find jobs, just like in the last recession. A situation in which unemployed people are receiving government benefits enough to afford rent, utilities, and groceries a year from now is a highly optimistic scenario, as opposed to the more likely scenario of mass unemployment and government benefits too stingy to afford the basics for people who don’t have work, and tens and tens of millions of people who have jobs that don’t pay enough to afford the basics. Apartment vacancies will be at all time highs as people move in with families, double (or quadruple up) with roommates, or just start sleeping in their cars or on the streets because they don’t have enough money to pay rent. Also huge default rate on mortgages.
I don’t think that there is any reason to resent or envy people who have lost their jobs in this pandemic. Most of them aren’t getting their jobs back, and will only avoid homelessness if they have family who can help them out with a place to sleep.
David Henderson
May 11 2020 at 12:21am
You wrote:
I agree. And I’m guessing you’ve noticed that I’m one of their fiercest defenders of their right to work.
Mark Z
May 11 2020 at 1:35am
Well, we can only hope this backfires and the absurdity of getting a 12% raise for doing 20% less work in a time of unprecedented privation is taken by its beneficiaries as evidence of the government’s incompetence rather than of its generosity.
Thomas Hutcheson
May 11 2020 at 10:54am
Why THIS absurdity and not the PPP or the bailout of the airlines, or the tax giveaway to real estate businessmen, or the “Tax Cuts for the Rich and Deficits Act of 2017,” or the trade war, or the absence of a tax on net CO2 emissions, or restrictions on H1B immigration, or tax encouragement of employer “provided: health insurance, or crop subsidies or minimum wages instead of a higher EITC, or any one of other sins against orthodox welfare economics?
David Henderson
May 11 2020 at 2:11pm
Thomas,
Embrace the power of “and.”
John Alcorn
May 15 2020 at 5:59pm
Re: “They tell me half their friends now make more money unemployed.”
Thanks to a new study by Peter Ganong, Pascal Noel, and Joseph Vavra (U. of Chicago, Booth School of Business), we now have systematic data, not just anecdotes. See “US Unemployment Insurance Replacement Rates During the Pandemic” (14 May 2020).
Here are excerpts:
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