The Corner

Economy & Business

Even Matt Yglesias . . .

I confess to subscribing to Matt Yglesias’s newsletter, and I usually find his missives interesting and informative. Today, he takes up the question of whether bonus unemployment benefits are discouraging employment and pushes back against those on the left who are resisting the idea that there’s a problem:

. . . here’s why I think it probably is an issue:

  1. As of our most recent data, job openings were at a high level.
  2. In the latest jobs report, we saw a huge fall in people who said they were working part-time but would prefer full-time hours.
  3. We also saw a substantial rise in employment by teenagers.
  4. The Ioana Marinescu, Daphné Skandalis, and Daniel Zhao research that found the $600/week bonus UI didn’t cost jobs did find that it reduced job search intensity — they just found it didn’t matter because jobs were so scarce that even with reduced search intensity, all the positions got filled.
  5. Low-end wages are clearly rising as employers try to attract workers.

If you ask me, points (1)–(3) all paint a picture of an economy where employers want to hire back folks who suffered pandemic-related job losses, but FPUC money is making those people reluctant to accept those jobs. Consequently, a lot of positions are being filled by people who are ineligible for FPUC either because they weren’t in the labor force previously (teens) or because they had steady part-time jobs.

Point (4) is also important here because FPUC fans liked this study when it came out, but it clearly supports the proposition that FPUC would now be elevating the unemployment rate.

Last, the fact that a lot of people on the left are reacting to (5) by essentially saying “good, the real issue here is that some employers are trying to get away with not paying a living wage” strikes me as revealing that there is actually less analytic disagreement here than a surface read of tweets would suggest.

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