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> we have at least strong reason to believe that the support payments from unemployment … substantially reduced marginal propensity to work. I always see peopl

> we have at least strong reason to believe that the support payments from unemployment … substantially reduced marginal propensity to work. I always see people blaming benefits for people not working, but nobody ever seems to offer an explanation why these same people didn’t return to work once the benefits were cut down to their pre-pandemic levels.

asdfasgasdgasdg 5y ago
I'm not sure that they aren't gradually doing so? I don't expect cessation of benefits to have an instantaneous effect.
- ashtonkem 5y ago
  Why wouldn’t it have a rapid and sudden effect? If you suddenly slash the UI benefits for an entire state at once and people only start trickling back to work slowly, then it implies that there are other unexplained factors at play. After all, the hypothesis is that UI is allowing people who otherwise would have to work to survive to not work. Shouldn’t the sudden cliff in payments make these people go find a job once their meager savings are exhausted? It’s also incongruous with the other hair on fire arguments you see about UI causing labor shortages; it’s inconsistent to say that UI makes people not work, then hand wave away why months and years after cutting the benefits were still facing a “labor shortage” in a lot of job markets. If it’s really down to UI, then you’ve got to propose some mechanism for why canceling UI didn’t fix the supposed labor shortage.
  - josephcsible 5y ago
    > once their meager savings are exhausted Doesn't the fact that they have savings explain why it's a slow trickle?
    - ashtonkem 5y ago
      The issue is that the median American doesn’t have enough savings to not work for a long time. The median American had $5,300 in 2019, and the median rent was a bit over $1,000. These numbers are just not consistent with huge swaths of the economy deciding to hold on for months and months of unemployment once benefits were cut. Since the numbers don’t add up, something else has to be going on.
      - josephcsible 5y ago
        But not everyone has the same amount of savings, or the same cost of rent, so there's a trickle as each individual runs out. And didn't unemployment bonuses only end 4 months ago?
        ashtonkem 5y ago
        Right, and a lot of people have a lot less savings than the median, and those who had to count on enhanced UI during the pandemic likely had less still, since more of those were in low to minimum wage service jobs. The second quintile had only $2,100 in savings, and the bottom a mere $800. I sincerely doubt many of them were able to save up enough to last more than a few months. The issue is that the story of enhanced UI isn't internally consistent. Apparently UI made all the (implied) lazy people stop working because it was more profitable to not work than work[0], which made it critical to turn off the benefits as soon as possible in order to force people back into the office. Except once they turned off the benefits people decided not to work and spend down their savings because ... erm, why would people do that? And doesn't this undermine the premise that people stopped working because it was cheaper to not work, if they're deciding to go broke not working for funsies? Personally I think that the story of the labor shortage is explained as such: 1. Loss of workers due to death, disability, retirement, changing careers, and general re-evaluation of life choices in the face a deadly pandemic 2. For those that remained in the service industry, a brief exposure to being treated with dignity and as an essential part of the economy was a real awakening moment for a lot of them, and many are no longer willing to put up with workers that pay poorly and treat them as sub human. In my parts the restaurants that offer good wages always seem to be fully staffed, while everywhere else has signs crapping on people's work ethic and apologizing for slow service. Coincidence? I think not. I think UI was critical to get people through the early period of the pandemic due to the chaos and the uncertainty of the early pandemic, but I am extremely dubious about the effect that UI had as compared to the deadly pandemic. > And didn't unemployment bonuses only end 4 months ago? Oh lord no. A lot of states started disabling enhanced UI back in June and July. My state ended it July 19th, nigh upon 7 months ago. I am doubtful many working Americans 0 - I've seen this floated a lot by CNBC types, and they never seem to engage with the fact that the most lethal profession during the pandemic was line cook.
  - TigeriusKirk 5y ago
    If benefits were indeed providing more income than people previously got from their jobs, they have a good chance of building savings from that income. Those savings won't instantly evaporate when the support is cut off, they'll decrease over time. As the savings run out, people will return to work. Personally I think this is a good thing, both the buffer and the staggered return to work.

asdfasgasdgasdg 5y ago

I'm not sure that they aren't gradually doing so? I don't expect cessation of benefits to have an instantaneous effect.

ashtonkem 5y ago
Why wouldn’t it have a rapid and sudden effect? If you suddenly slash the UI benefits for an entire state at once and people only start trickling back to work slowly, then it implies that there are other unexplained factors at play. After all, the hypothesis is that UI is allowing people who otherwise would have to work to survive to not work. Shouldn’t the sudden cliff in payments make these people go find a job once their meager savings are exhausted? It’s also incongruous with the other hair on fire arguments you see about UI causing labor shortages; it’s inconsistent to say that UI makes people not work, then hand wave away why months and years after cutting the benefits were still facing a “labor shortage” in a lot of job markets. If it’s really down to UI, then you’ve got to propose some mechanism for why canceling UI didn’t fix the supposed labor shortage.
- josephcsible 5y ago
  > once their meager savings are exhausted Doesn't the fact that they have savings explain why it's a slow trickle?
  - ashtonkem 5y ago
    The issue is that the median American doesn’t have enough savings to not work for a long time. The median American had $5,300 in 2019, and the median rent was a bit over $1,000. These numbers are just not consistent with huge swaths of the economy deciding to hold on for months and months of unemployment once benefits were cut. Since the numbers don’t add up, something else has to be going on.
    - josephcsible 5y ago
      But not everyone has the same amount of savings, or the same cost of rent, so there's a trickle as each individual runs out. And didn't unemployment bonuses only end 4 months ago?
      - ashtonkem 5y ago
        Right, and a lot of people have a lot less savings than the median, and those who had to count on enhanced UI during the pandemic likely had less still, since more of those were in low to minimum wage service jobs. The second quintile had only $2,100 in savings, and the bottom a mere $800. I sincerely doubt many of them were able to save up enough to last more than a few months. The issue is that the story of enhanced UI isn't internally consistent. Apparently UI made all the (implied) lazy people stop working because it was more profitable to not work than work[0], which made it critical to turn off the benefits as soon as possible in order to force people back into the office. Except once they turned off the benefits people decided not to work and spend down their savings because ... erm, why would people do that? And doesn't this undermine the premise that people stopped working because it was cheaper to not work, if they're deciding to go broke not working for funsies? Personally I think that the story of the labor shortage is explained as such: 1. Loss of workers due to death, disability, retirement, changing careers, and general re-evaluation of life choices in the face a deadly pandemic 2. For those that remained in the service industry, a brief exposure to being treated with dignity and as an essential part of the economy was a real awakening moment for a lot of them, and many are no longer willing to put up with workers that pay poorly and treat them as sub human. In my parts the restaurants that offer good wages always seem to be fully staffed, while everywhere else has signs crapping on people's work ethic and apologizing for slow service. Coincidence? I think not. I think UI was critical to get people through the early period of the pandemic due to the chaos and the uncertainty of the early pandemic, but I am extremely dubious about the effect that UI had as compared to the deadly pandemic. > And didn't unemployment bonuses only end 4 months ago? Oh lord no. A lot of states started disabling enhanced UI back in June and July. My state ended it July 19th, nigh upon 7 months ago. I am doubtful many working Americans 0 - I've seen this floated a lot by CNBC types, and they never seem to engage with the fact that the most lethal profession during the pandemic was line cook.
- TigeriusKirk 5y ago
  If benefits were indeed providing more income than people previously got from their jobs, they have a good chance of building savings from that income. Those savings won't instantly evaporate when the support is cut off, they'll decrease over time. As the savings run out, people will return to work. Personally I think this is a good thing, both the buffer and the staggered return to work.