Posted by: Doug Henwood | March 19, 2020

Why UI isn’t enough

I’m going to be posting a series of commentaries on the current crisis. Here’s a quick first

It’s odd to see Democrats like Pelosi and Schumer objecting to Republican schemes to send everyone a check for $1,000, maybe two. Of course, one- or two-off checks for $1,000 won’t pay many of the the bills for very long. But talk of means-testing right now looks mean, cheap, and politically suicidal.

Schumer says that rather than write checks, we should expand unemployment insurance (UI) benefits. It would have to be some expansion. Benefits are low, of short duration, and available to a smaller share of the unemployed than in the past.

Right now, the average UI check is $372 a week and the average duration of benefits is just under 15 weeks. That works out to a total of $5,515. While well above $0, it still won’t take you very far. During the worst months of the last crisis, in early 2010, the average check was $307 and the duration of benefits 20 weeks, for a total of $6,236. That’s about a tenth the average household’s yearly income ($63,179).

And the share of the unemployed drawing benefits has declined over the decades. Now, less than a third of the unemployed are drawing benefits. (Those are known as “continuing claims,” in the jargon). In the 1970s it was around 40%, sometimes as high as 50%. The unemployed include people who’ve quit their jobs voluntarily, or are just entering or reentering the workforce. If you take them out and compare continuing claims to the number of job losers among the unemployed, the numbers are higher, but still dispiriting: not quite two-thirds. It was actually lower in the aftermath of the 2008–2009 crisis, just over 50%. In the 1970s, it was between 90% and 110% (!). It’s all in the graph below.

UI share of U

One wonders what sort of expansion Schumer has in mind, but it would have to be a very serious expansion to be of serious help in the coming months. In the meanwhile, don’t complain about $1,000 checks.

 

 


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