Ruling elites speak. WSJ gives thumbs down to unemployment insurance

The Wall Street Journal published an editorial continuing to bemoan the fact unemployed American workers are receiving an additional $600 weekly during the Covid-19 Pandemic.

The problem is with the American economic system. American workers should be paid a living wage.  Many wage earners must take on two jobs to make ends meet; housing, health care, food and basic necessities. If America guaranteed a “living wage” to everyone the issue that the WSJ has turned on its head would not exist. The extra $600 weekly the currently unemployed are receiving simply raises their income to a sustainable level. It is not a disincentive to work. It is money required to exist at a subsistence level in America. The WSJ editorial is yet another example of its ruling elites , “Let them eat cake” philosophy.

Following is the WSJ Editorial – 4.22.2020

Paying Americans Not to Work

Four GOP Senators were right about the harm from rich UI benefits.

Much of the harm from the coronavirus is unavoidable, but it would be nice if politicians didn’t compound the damage by ignoring the laws of economics. The worst blunder so far on that score is the $600 increase in federal jobless benefits that is already undermining the economic recovery.

On Wednesday we ran an op-ed from Kurt Huffman, whose Portland, Ore., company helps chefs run and staff their restaurants. Because of the coronavirus, he had to lay off 700 people. But some restaurants have adapted with takeout and delivery, so he needs to hire some back.

Some extra unemployment insurance is necessary, but the rich extra compensation from the $2.2 trillion Cares Act is encouraging those employees to stay home. Mr. Huffman did the math in his op-ed: A starting wage for a line cook is about $640 a week. Oregon’s unemployment offers about $416 per week. But thanks to the $600 federal bonus, that same worker now collects $1,016. Why would anyone take a pay cut to go back to work?

We’re hearing similar stories from around the country as small business owners look to reopen on a tentative or partial basis. Employees say they’ll take the unemployment check for as long as they can make more money by not working. One internal Trump Administration analysis estimates that this work disincentive applies to millions of Americans.

unemployed II 4.22.2020.jpg

This does not mean these workers are lazy. Workers are making rational decisions based on the economic incentives the political class has created. And they are acting exactly as many people said was likely.

That includes Republican Senators Lindsey Graham (S.C.), Ben Sasse (Neb.), Tim Scott (S.C.,) and Rick Scott (Fla.), who bravely spoke up when they saw the final language of the relief bill that was negotiated by other GOP Senators. Perhaps because they represent states with thousands of small businesses, they understood the incentive issues better than others who think every American business operates like Exxon and Apple.

The Senators were attacked in the media, and House Speaker Nancy Pelosi called them “cruel.” But they turned out to be right. This means that no matter when governors announce their states’ reopenings, many businesses will still have to wait until July 31—when the extra $600 expires—to be able to afford the workers they need to reopen.

The question now is whether the Trump Administration will learn from its negotiating mistake. Democrats will try to extend the $600 for another few months, and then a few more after that, as they describe anyone who disagrees as heartless. Republicans who cower at that argument without fighting back will hurt their own electoral prospects as the jobless rate will stay higher for longer and the recovery will take that much longer to take hold.

The Democratic 2020 campaign strategy is to blame Republicans for the health and economic damage from the virus. Republicans need to be able to point to an economy that is growing again by the autumn, and that means not giving Americans an incentive not to work.