Opinion: Government response to coronavirus increasing unemployment

By Rachel Grezler | The Daily Signal

The economic fallout from the coronavirus national emergency could last much longer than the health consequences. To limit the disruption of economic activity, policymakers must act now to help families maintain their income and their connections to employment.

Before the virus hit the United States, first-time unemployment claims were near a half-century low. Those days are gone — at least for now. In just one week, from March 7 to March 14, initial unemployment claims jumped by a third, rising from 211,000 to 281,000.

We don’t yet know how many of these workers have been laid off rather than furloughed, but we do know further jumps of even larger magnitude will follow in the coming weeks.

Workers who lose their jobs often lose their health insurance and their attachment to the labor force. That’s bad not just for them and their families, but for employers and government as well.

Wikimedia Commons/amirappel

If millions of people become unemployed and lose their livelihood and health care, the consequences could be more severe than the virus itself.

For starters, unemployment insurance typically replaces only about half of workers’ wages up to a cap. Depending on the state, part-time and self-employed workers may not be eligible for benefits at all. Moreover, it could take weeks for workers to receive benefits — even longer when there’s a rapid increase in claims.

Moreover, job loss — even when due to temporary public health circumstances — can have significant long-term consequences. Economic studies show that substantial periods of unemployment adversely affect workers’ future job and income prospects.

Losing workers is bad for employers because recruiting and training new workers is costly. And prior to this recent disruption, employers were hard-pressed to find the workers they needed and were doing things like offering new benefits and added flexibility to attract and retain workers.

And job losses translate into increased federal spending on social safety net programs at the same time other tax revenues decline — the result of individuals’ and businesses’ lost incomes.

That’s why it’s so important to keep people connected to their jobs amid the COVID-19 emergency.

The problem now facing many employers — particularly smaller ones — is that they do not have the cash flows to keep sending paychecks to workers on leave. The Families First Coronavirus Response package signed into law by President Trump after it was approved by the House and Senate exacerbated this problem by requiring businesses previously unable to afford paid sick leave and family leave to provide it, somehow, all the same.

Employers don’t want to lay workers off, but when faced with having to pay them for up to 60 days of leave and then filing for a credit that they most likely cannot receive before July, laying off or furloughing workers may be the only way they can stay in business.

Policymakers can make it easier for businesses to keep more workers on their payrolls by building on the measures already enacted.

The credits that employers can eventually receive as reimbursement for the paid sick and family leave mandated by the Families First Coronavirus Response Act should be made available to businesses as soon as possible, as refunds that can be reconciled against future tax filings.

Moreover, these paid leave benefits — and the subsequent credits to employers — should extend not just to workers who are sick, caring for sick family members, or caring for children whose schools and child care centers have closed.

The benefits should also go to workers whose hours and pay have been cut due to disruptions in business operations. This should include all workers, regardless of whether they work for a large company (over 500 employees) or a small business.

Broadening the group of eligible workers and making sure employer credits are available quickly can help keep more people connected to their current jobs.

If millions of people become unemployed and lose their livelihood and health care, the consequences could be more severe than the virus itself. It may be more cost-effective for the government to pay workers’ wages for a short period than to let massive unemployment tank government revenues and spike deficits.

This commentary originally appeared at FoxNews.

Images courtesy of Public domain and Wikimedia Commons/amirappel

3 thoughts on “Opinion: Government response to coronavirus increasing unemployment

  1. Many thousands laid off – child care centers shuttered – apparently most VT workers are not ‘essential’. What’s the state doing? Chirpy, chatty opeds and news stories offer a glib dismissal of VTers who are hurting from those who are not. Nor do I see an adequate response from state government or info from online publications specifically nonprofits in a go-to helpful format unless I’ve missed something.

    So 2 deaths and double 40ish ‘cases’ dwarfed by any flu season in recent memory. Scott and other bureaucrats come out to make new edicts on a routine basis. The posturing and empty platitudes spouted by agency heads, governor and legislators ring hollow. Offering ‘suggestions’ while circling the wagons around lazy lawmakers is not a solution.

    No task force to fasttrack response to hurting families and unemployed workers – just legislators fiddling while VT burns? As legislators reportedly “scramble” unemployment applications overwhelm the system not unlike the VT Health Connect debacle:
    Coronavirus Layoffs Overwhelm Vermont Unemployment Center
    Posted By Colin Flanders on Tue, Mar 17, 2020 at 11:33 PM

    “Sirotkin has already run into difficulties finding the necessary funding, as lawmakers fear drawing down Vermont’s $500 million unemployment trust fund and continue looking to Washington, D.C., for signs of what support is on the way”. [???] If you’re waiting for a pie in the sky you’re not exactly “scrambling”

    However this monstrosity of a bill sponsored with great pride does next to nothing to help struggling unemployed Vermonters and families but hands money to employed health care workers, hospitals, insurance agencies, banks and illegal immigrants – a hearty golfclap to its sponsor:

    With VT State Employee ratioed 4:1 in VT/NH someone surely is able to mobilize a fasttrack for Vermonters suffering under the poorly enacted edicts affecting hurting VTers and families as it looks like they’r the ones who have jobs. The $500,000 in rainy day unemployment benefits could be utilized and repayed? Please don’t call taking weeks to shuffle papers around, push a pencil and gab on the phone ‘work’ – it’s a sinecure.

    There’ a federal Disaster SNAP program which uses direct deposit to bank account or a card – is not in effect – why? Legislators are sitting on brains w/o having to drive to Montpelier or the obligatory shuffling around. Can our useless congressional delegation step up…

    Why were these decisions affecting many thousands of VTers not made w/o mobilizing response for those affected first. Government agencies are overwhelmed – why? With all the agency heads could be fastracking all of this and using call centers if necessary – it’s a matter of an application, eligibility verification and entering info into the system. Everything is automated and could be done online and phone interview if necessary.

    Epic fail.

    • Nothing is being done. Period. Anyone who can prove otherwise is welcome to post a link – all ears. Our reckless and irresponsible governor, legislative leaders, congressional delegation and agency heads are dragging feet allowing this all to happen with no real solutions, waiting for money to fall from the sky. There is a $500 million which could be tapped immediately for unemployed Vermonters and SBA funds such as what NH governor has secured for his business owners available.

      The president he hates so much, and who he and other RINOS who rely on Dem votes and campaign cash is expected to solve problems which these lazy fools who essentially helped themselves to a spring vacation under the guise of Wuhan Flu. And as the Trumphaters they all are have aligned selves with China and rest of Trumphating globalists who think this will topple our Presiedent and ruin chances to win 2020. Be careful what you wish for.

      Unless steps are taken to immediately offer relief and real solutions irreparable harm will be done to our state and Vermonters. VT needs to go back to work and open their businesses or lose everything and starve.

      Blind are leading the sighted, and fearmongers who live lives of ease, billing us for killing us are leading the panic stricken and sane normal ppl on a path to ruin.

  2. Hey Rachel, wake up and pay attention!!! What you are wishing for is exactly what’s been going on for the past several weeks!!!

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