Study Contradicts Mnuchin Claim That Lazy Workers Choose Unemployment Aid Over Jobs

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Treasury Secretary Steven Mnuchin on Sunday was peddling his claim on TV that enhanced unemployment benefits encourage lazy American workers to sit at home. But a new Yale University study shows him wrong. 

Last week, Mnuchin insisted it’s “not fair” to taxpayers to pay workers to “sit  home.” Critics pointed out that workers are taxpayers, and they’re home because there is no work.

On Sunday, Mnuchin complained that workers were being “overpaid” by the $600 a week in extra unemployment benefits that expired on Friday. In “certain cases we’re paying people more to stay home than to work,” he said on ABC’s “This Week.” That’s “created issues in the entire economy,” he added.

But the study by Yale economists found “no evidence” that enhanced benefits authorized by Congress in March decreased employment. 

People who were collecting enhanced benefits actually resumed working at a similar and even quicker rate than others who were not eligible for the extra aid once work was available, according to the study, “Employment Effects of Unemployment Insurance Generosity During the Pandemic.”

“The data do not show a relationship between benefit generosity and employment paths after the CARES Act” enhancement was provided, said economics professor Joseph Altonji, a co-author of the report.

The researchers found that even workers who received larger increases in their unemployment benefits relative to their wages did not experience greater declines in employment once jobs were available. 

White House resistance to renewing the aid is a major sticking point in the new COVID-19 relief package being negotiated in Congress. 

The plunge in income with the disappearance of the enhanced benefits is expected to result in mortgage defaults and evictions for some 20 million Americans. It will also damage businesses in an economy overwhelmingly fueled by consumer spending.

So according to Mnuchin a few hundred bucks in unemployment benefits makes American workers lazy, but billions in bailouts for Wall St. and corporations is good for the economy? https://t.co/psexsBWqu4

— Robert Reich (@RBReich) August 2, 2020

Mnuchin, a billionaire, said he is also suddenly concerned about “piling on debt” after supporting the  $2.2 trillion CARES Act aid package.

Mnuchin’s stinginess with wage earners is in marked contrast to his overwhelming support for taxpayer-funded payments to business owners, who can use some of the nearly $600 billion paid out in the federal Paycheck Protection Program to sit home. Those loans can be forgiven entirely, turning them into grants if the money is used on certain expenses, such as rent, utilities and payroll — including for business owners.

Mnuchin last month indicated that a portion of those loans should automatically be forgiven to streamline the process — without tracking compliance.

Multimillion-dollar companies, wealthy lobbying and hedge fund operations, large chains, firms owned by foreign companies, federal lawmakers, and several companies with ties to President Donald Trump have been granted substantial loans under the program.

The Yale study analyzed weekly data from a company that provides scheduling and timesheet software to small businesses throughout the U.S.

The dataset largely represented hourly employees who earn relatively low wages, a segment of the labor market that has been disproportionately affected by the pandemic, the researchers noted. 

If the enhanced benefits were a disincentive to return to work, the data would have shown a significant drop in employment in the week after the CARES Act took effect, the study noted.  It would also show subsequent decreases in relative employment as workers with more generous unemployment benefits put off returning to work. Neither case was supported by the data, the study noted.

The study results provide “suggestive evidence that, in the aggregate, expansions in unemployment insurance benefit generosity did not disincentivize work,” researchers concluded.

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