I suspect if the UI bonus was made permanent, it would become a default minimum wage hike.
My brother-in-law, who owns a fast food joint, is having problems getting workers. But I also know, it’s partly because he doesn’t wanna pay what he needs to pay.
The whole thing sort of makes me torn.
One thing I thought about, which I don’t see mentioned a lot is that the hiring wage needs to be a decent amount higher than the UI rate.
For instance, in Idaho the UI is 448 + 300. Or 748 total. Which works out to $19 an hour. Which is way more than the typical restaurant salary.
If I was making $19 an hour staying home, I’m not gonna take a job unless I’m making $22 or $23 an hour.
Previously someone who earned $10 an hour would of receive reduced benefits, but right now I believe everyone gets max.
Quite frankly, if it wasn’t a family business, my wife would of stayed on UI benefits. She’s actually losing money by going to work.
Permanently extending UI would have far, FAR more perverse effects than even a substantial minimum wage hike. Under a minimum wage hike, you still don't make money if you don't work. A permanent UI creates an implicit >100% marginal tax rate on earnings.
One can't just opt to go on UI and stay on forever. One has to lose work and it normally lasts only 6 months. Also self-employed aren't normally eligible (because they don't pay into the fund).
Nice column Noah! Do you think that the feds and the state DOL could actually implement a UI bonus before its usefulness has passed? Many state UI agencies did not distinguish themselves during the pandemic. I recognize that it is normative in economics to ignore such implementation issues, but ...
Agreed with Ken. The economic assessments make sense, but the opinions around vaccinations and the political right seemingly keeping the country behind ruined the article for me.
This is coming from an European who has little interest nor skin in the game with relation to the US' politics. I believe we've all had enough of authors virtue signalling their beliefs with little sprinkles throughout otherwise well-written pieces.
Purely anecdotal but I know couples who have decided that one member of the couple is not going back to work after UI ends or even WFH. Covid showed them how costs could be lower with a different lifestyle - no need for 2 cars, not as many meals out, local travel instead of a trip to Europe and the big one savings on childcare. I think it will take much higher wages to get some of these people back to work.
Your economic assessments make sense. Vaccinating kids for a virus that doesn’t harm them makes no sense. I also don’t understand the requirement that everybody get vaccinated. People at risk should consider it, those who aren’t - maybe as well, but certainly not young people lacking comorbidities, or kids. Note that I did get the vaccination (57 years old, no co-morbidities, but I travel a lot). I’d appreciate more on why _everybody_ needs to be vaccinated. I don’t see the need.
Because vaccines don't exist to keep people from feeling sick; they exist to keep the virus from encountering hosts. This is for three reasons:
(1) Some people have comorbidities that make the virus dangerous to them, but _also_ make the vaccines dangerous. So the only way to protect these people (and thereby prevent their illnesses from straining the health system) is to keep them from getting infected. This means vaccinating everyone around them, even if they would be relatively unharmed by the virus.
(2) Along the same lines, the vaccines aren't 100% effective, just ~90%. Vaccinating those at risk and exposing them to the unvaccinated means some will end up infected anyways.
(3) Viruses evolve. The larger the population of a species (even non-virus ones), the faster it evolves. We don't want the coronavirus to evolve faster than we can put appropriate vaccines into production, so we need to drive its population as low as possible.
Implicit in my note, but unstated, was that I view the goal back at the “flatten the curve” period of a year ago - to not inundate the health care system, not to keep anybody and everybody from catching a virus that is largely perfectly safe for them.
and what would you say about the increasingly common reports of "long Covid" and autoimmune disorders in people who had either mild or asymptomatic cases? These people only count as one "case" but if they end up suffering symptoms and possible life-threatening conditions for life, does that factor in? Hell, I would rather be put in the ICU for a month and recover fully than have a cakewalk case that leads to years of malady. And while I partly agree with you on the "flatten the curve" issue on the moving of goalposts, I think people are falling back on that line a bit too much. After all, that was a very specific point in time when the only real, immediate worry was the overwhelming of the health care system. No one ever said "and once we flatten the curve there will be no changes or evolution on policy whatsoever".
I take a (quite common) prescription drug that has a side-effect of making vaccines considerably less effective. I have no option of effectively protecting myself except by interacting (as much as possible) only with vaccinated people. But, I can't control that terribly well, and plenty of people have very little control over who they interact with. There are lots of situations like this.
Sorry for that. Immune compromised/vaccine intolerant populations have existed from the beginning. To me this is like peanut allergies... make some accommodations but don’t turn society upside down. by the way: I did review my meds with docs for vaccine effect and also whether they enhanced risk to COVID. Turns out no on both accounts, and in at least one case correlated with better COVID outcomes. Best wishes!
My guess is we just disagree on what constitutes "turn society upside down." Routine, mandatory vaccination is already the norm for children, so I don't see the big deal with requiring another vaccine. But this is also a general principle of mine, since I would be very happy if, for instance, schools and colleges required flu shots and more pressure were put on adults to get them too. I just think vaccines are good social policy, one that we're already fundamentally bought-into as a society.
Routine on well tested long standing vaccines for deadly diseases _to_ them.
We don’t really know what messing around with people’s DNA / RNA or whatever else these things will do to young still forming brains and bodies.
I’m old. Soon to be more at risk. I’ll take the risk. Not sure it’s fair, or right, for a fear of mine to force young kids down a path they need not travel. That seems needlessly selfish and self-centered - to me anyway.
Our core disagreement may be that I don’t see a perfectly safe world as a reasonable or attainable goal - nor that we really understand if mass inoculations of this new tech even constitutes that in young people.
for the love of God mRNA vaccines do not "mess around with people's DNA / RNA". Please read up on the science behind the tech. It's people like you regurgitating this false talking point that are helping drive the vaccine skepticism that's prolonging this pandemic. You said in an earlier comment something along the lines of the world will never be truly safe, we take risks all the time. So why the worry over the vaccines? The more time that passes, the more data come out pointing to their safety and efficacy. At what point do you change your position?
for the record, I had some doubts earlier this year before any data came back, but I've changed my positions as reality has evolved from theory. Not trying to single you out but most people I know that take your position seem to take it from an almost religious fervror, unwilling to allow real life events affect their calculus of the situation. To me that's irresponsible. As someone else noted, pandemics/viruses don't care about individuals or their decisions or rights. They just want more hosts. So your decisions do not happen inside a bubble. It's all interconnected. Kids may not have much chance from getting sick if they get the virus, but if the data is right that the vaccines cut transmission as much as they appear to, that means fewer cases to spread to people who may not be so lucky. Granted, I think the mask mandates and distancing mandates are useless and even counterproductive at this point, but these mRNA vaccines are being vindicated by the day.
Who benefits disproportionately doesn't rank highly in my calculus. I get a flu shot not because I'm terribly concerned about what would happen if I got the flu, but because if everyone got every flu shot there'd be a whole lot less flu going around and that would result, in aggregate, in a lot less death. I think of vaccines as operating on the population level, not as individual medicine.
As for the risks posed by newer technology, I can absolutely understand unease there. They don't affect DNA, but new things are new and I get why that can be discomfiting. I fundamentally trust the vaccine approval process, given its good track record. So, I think the risk/benefit still favors vaccination quite handily.
I don't think the world can be perfectly safe, but I do think that it can be a hell of a lot safer. I'm willing to be a bit more collectivist to get there, as I'm OK with some things being social and not individual.
Looking at the data before seasonal adjustment (https://fred.stlouisfed.org/series/PAYNSA) I stand corrected; it's clear last year's odd numbers were properly excluded from seasonal adjustment. The issue is that April is typically a very big month for hiring. This April was also, nearly 1.1m net nonfarm jobs added, on par with the strong April 2018 and April 2019 numbers. Remember that we were in a fiscally juiced late cycle before Covid hit, with a 2m/year pace of net job gains and low unemployment. There is no we can get back to that pre-Covid job-gains trend without either a lot of wage hiking or a lot more immigration.
Daily covid cases are still higher or equal to September as shown in your graph and it looks like there is no substantial fall in cases over the near-term.
Is it possible that signing bonuses/wage-subsidies and the removal of UI will discourage businesses from taking precautions to keep their workers safe from covid?
I can see why businesses might be holding out on the wage hike. The PUI is temporary. Any wage hikes will likely be permanent, at least for the employees hired at that wage.
Are there any Real Economics Papers™ about employers' "wage stickiness" like this? Similar situations in the past? Lessons learned? That kind of thing?
My family runs a tool-and-die shop in Northern Ohio. They and every other firm with whom they do business are struggling to fill vacancies because a substantial fraction of those laid off at the beginning of the pandemic are, after Ohio's baseline UI benefits and the extra $300/month from the USA, earn more income by not working than they ever did or could working.
You don't need some fancy regression-discontinuity or natural experiment to know that if you pay people not to work, they'll choose not to work.
I don't think hiring has slowed much if any. This looks more like seasonal mis-adjustment from robotic comparison to last year's monthly job numbers.
The people in Pandemic UI aren't such a huge portion of the labor force. And a very big portion of them were self-employed and will be going back to that, not entering the low-paid job market.
I suspect if the UI bonus was made permanent, it would become a default minimum wage hike.
My brother-in-law, who owns a fast food joint, is having problems getting workers. But I also know, it’s partly because he doesn’t wanna pay what he needs to pay.
The whole thing sort of makes me torn.
One thing I thought about, which I don’t see mentioned a lot is that the hiring wage needs to be a decent amount higher than the UI rate.
For instance, in Idaho the UI is 448 + 300. Or 748 total. Which works out to $19 an hour. Which is way more than the typical restaurant salary.
If I was making $19 an hour staying home, I’m not gonna take a job unless I’m making $22 or $23 an hour.
Previously someone who earned $10 an hour would of receive reduced benefits, but right now I believe everyone gets max.
Quite frankly, if it wasn’t a family business, my wife would of stayed on UI benefits. She’s actually losing money by going to work.
Thing is, there's no chance at all of Pandemic UI being made permanent...
Permanently extending UI would have far, FAR more perverse effects than even a substantial minimum wage hike. Under a minimum wage hike, you still don't make money if you don't work. A permanent UI creates an implicit >100% marginal tax rate on earnings.
Exactly right. UI is a back door minimum wage hike. Pretty sneaky and awesome at the same time.
One can't just opt to go on UI and stay on forever. One has to lose work and it normally lasts only 6 months. Also self-employed aren't normally eligible (because they don't pay into the fund).
Nice column Noah! Do you think that the feds and the state DOL could actually implement a UI bonus before its usefulness has passed? Many state UI agencies did not distinguish themselves during the pandemic. I recognize that it is normative in economics to ignore such implementation issues, but ...
Agreed with Ken. The economic assessments make sense, but the opinions around vaccinations and the political right seemingly keeping the country behind ruined the article for me.
This is coming from an European who has little interest nor skin in the game with relation to the US' politics. I believe we've all had enough of authors virtue signalling their beliefs with little sprinkles throughout otherwise well-written pieces.
Purely anecdotal but I know couples who have decided that one member of the couple is not going back to work after UI ends or even WFH. Covid showed them how costs could be lower with a different lifestyle - no need for 2 cars, not as many meals out, local travel instead of a trip to Europe and the big one savings on childcare. I think it will take much higher wages to get some of these people back to work.
I kept reading "UI" as "User Interface". :/
Your economic assessments make sense. Vaccinating kids for a virus that doesn’t harm them makes no sense. I also don’t understand the requirement that everybody get vaccinated. People at risk should consider it, those who aren’t - maybe as well, but certainly not young people lacking comorbidities, or kids. Note that I did get the vaccination (57 years old, no co-morbidities, but I travel a lot). I’d appreciate more on why _everybody_ needs to be vaccinated. I don’t see the need.
Because vaccines don't exist to keep people from feeling sick; they exist to keep the virus from encountering hosts. This is for three reasons:
(1) Some people have comorbidities that make the virus dangerous to them, but _also_ make the vaccines dangerous. So the only way to protect these people (and thereby prevent their illnesses from straining the health system) is to keep them from getting infected. This means vaccinating everyone around them, even if they would be relatively unharmed by the virus.
(2) Along the same lines, the vaccines aren't 100% effective, just ~90%. Vaccinating those at risk and exposing them to the unvaccinated means some will end up infected anyways.
(3) Viruses evolve. The larger the population of a species (even non-virus ones), the faster it evolves. We don't want the coronavirus to evolve faster than we can put appropriate vaccines into production, so we need to drive its population as low as possible.
Implicit in my note, but unstated, was that I view the goal back at the “flatten the curve” period of a year ago - to not inundate the health care system, not to keep anybody and everybody from catching a virus that is largely perfectly safe for them.
and what would you say about the increasingly common reports of "long Covid" and autoimmune disorders in people who had either mild or asymptomatic cases? These people only count as one "case" but if they end up suffering symptoms and possible life-threatening conditions for life, does that factor in? Hell, I would rather be put in the ICU for a month and recover fully than have a cakewalk case that leads to years of malady. And while I partly agree with you on the "flatten the curve" issue on the moving of goalposts, I think people are falling back on that line a bit too much. After all, that was a very specific point in time when the only real, immediate worry was the overwhelming of the health care system. No one ever said "and once we flatten the curve there will be no changes or evolution on policy whatsoever".
I take a (quite common) prescription drug that has a side-effect of making vaccines considerably less effective. I have no option of effectively protecting myself except by interacting (as much as possible) only with vaccinated people. But, I can't control that terribly well, and plenty of people have very little control over who they interact with. There are lots of situations like this.
Sorry for that. Immune compromised/vaccine intolerant populations have existed from the beginning. To me this is like peanut allergies... make some accommodations but don’t turn society upside down. by the way: I did review my meds with docs for vaccine effect and also whether they enhanced risk to COVID. Turns out no on both accounts, and in at least one case correlated with better COVID outcomes. Best wishes!
My guess is we just disagree on what constitutes "turn society upside down." Routine, mandatory vaccination is already the norm for children, so I don't see the big deal with requiring another vaccine. But this is also a general principle of mine, since I would be very happy if, for instance, schools and colleges required flu shots and more pressure were put on adults to get them too. I just think vaccines are good social policy, one that we're already fundamentally bought-into as a society.
Routine on well tested long standing vaccines for deadly diseases _to_ them.
We don’t really know what messing around with people’s DNA / RNA or whatever else these things will do to young still forming brains and bodies.
I’m old. Soon to be more at risk. I’ll take the risk. Not sure it’s fair, or right, for a fear of mine to force young kids down a path they need not travel. That seems needlessly selfish and self-centered - to me anyway.
Our core disagreement may be that I don’t see a perfectly safe world as a reasonable or attainable goal - nor that we really understand if mass inoculations of this new tech even constitutes that in young people.
for the love of God mRNA vaccines do not "mess around with people's DNA / RNA". Please read up on the science behind the tech. It's people like you regurgitating this false talking point that are helping drive the vaccine skepticism that's prolonging this pandemic. You said in an earlier comment something along the lines of the world will never be truly safe, we take risks all the time. So why the worry over the vaccines? The more time that passes, the more data come out pointing to their safety and efficacy. At what point do you change your position?
for the record, I had some doubts earlier this year before any data came back, but I've changed my positions as reality has evolved from theory. Not trying to single you out but most people I know that take your position seem to take it from an almost religious fervror, unwilling to allow real life events affect their calculus of the situation. To me that's irresponsible. As someone else noted, pandemics/viruses don't care about individuals or their decisions or rights. They just want more hosts. So your decisions do not happen inside a bubble. It's all interconnected. Kids may not have much chance from getting sick if they get the virus, but if the data is right that the vaccines cut transmission as much as they appear to, that means fewer cases to spread to people who may not be so lucky. Granted, I think the mask mandates and distancing mandates are useless and even counterproductive at this point, but these mRNA vaccines are being vindicated by the day.
Who benefits disproportionately doesn't rank highly in my calculus. I get a flu shot not because I'm terribly concerned about what would happen if I got the flu, but because if everyone got every flu shot there'd be a whole lot less flu going around and that would result, in aggregate, in a lot less death. I think of vaccines as operating on the population level, not as individual medicine.
As for the risks posed by newer technology, I can absolutely understand unease there. They don't affect DNA, but new things are new and I get why that can be discomfiting. I fundamentally trust the vaccine approval process, given its good track record. So, I think the risk/benefit still favors vaccination quite handily.
I don't think the world can be perfectly safe, but I do think that it can be a hell of a lot safer. I'm willing to be a bit more collectivist to get there, as I'm OK with some things being social and not individual.
Looking at the data before seasonal adjustment (https://fred.stlouisfed.org/series/PAYNSA) I stand corrected; it's clear last year's odd numbers were properly excluded from seasonal adjustment. The issue is that April is typically a very big month for hiring. This April was also, nearly 1.1m net nonfarm jobs added, on par with the strong April 2018 and April 2019 numbers. Remember that we were in a fiscally juiced late cycle before Covid hit, with a 2m/year pace of net job gains and low unemployment. There is no we can get back to that pre-Covid job-gains trend without either a lot of wage hiking or a lot more immigration.
Daily covid cases are still higher or equal to September as shown in your graph and it looks like there is no substantial fall in cases over the near-term.
Is it possible that signing bonuses/wage-subsidies and the removal of UI will discourage businesses from taking precautions to keep their workers safe from covid?
it looks like there "will be" no substantial fall in cases over the near-term (from our current gradient and the slowdown in vaccinations).
I can see why businesses might be holding out on the wage hike. The PUI is temporary. Any wage hikes will likely be permanent, at least for the employees hired at that wage.
Why the title change?
The third shift at the local Waffle House walked out en-masse Saturday morning last week. Local PD found the place unlocked and unattended at about 3am. Even the day shift is having trouble getting people, and Waffle House isn't the only one. South Carolina's response is to end the Pandemic UI as of June 30 "to address workforce shortages". https://governor.sc.gov/news/2021-05/south-carolina-return-pre-pandemic-unemployment-program-address-workforce-shortages
I find myself hoping all those people getting it right now have put some of it away so they can't be forced back to work immediately
Are there any Real Economics Papers™ about employers' "wage stickiness" like this? Similar situations in the past? Lessons learned? That kind of thing?
There are some...
From a sample size of one:
My family runs a tool-and-die shop in Northern Ohio. They and every other firm with whom they do business are struggling to fill vacancies because a substantial fraction of those laid off at the beginning of the pandemic are, after Ohio's baseline UI benefits and the extra $300/month from the USA, earn more income by not working than they ever did or could working.
You don't need some fancy regression-discontinuity or natural experiment to know that if you pay people not to work, they'll choose not to work.
I don't think hiring has slowed much if any. This looks more like seasonal mis-adjustment from robotic comparison to last year's monthly job numbers.
The people in Pandemic UI aren't such a huge portion of the labor force. And a very big portion of them were self-employed and will be going back to that, not entering the low-paid job market.