During the height of the COVID-19 outbreak, the vast majority of states went into an economic lockdown. Hoping to “slow the spread” and thinking that businesses would be unable to cope with recommended health guidelines and regulations, storefronts were largely told to close up shop. Millions of Americans lost their jobs overnight.
In response, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which—among many other welfare provisions—included a $600 weekly bonus for individuals receiving unemployment insurance (UI) benefits. The benefit was temporary, and lawmakers hoped that layoffs would be temporary, as well. Unfortunately, that wasn’t the case. As states continued to restrict businesses’ ability to operate, countless Americans have remained without work. The restaurant industry, alone, has lost around 100,000 businesses since the lockdowns began, and nearly three million restaurant employees are out of work.
Congress’s unprecedented UI bonus was intended to help individuals by giving them a boost to carry on until work reopened. But research shows the benefit actually held back our economic recovery. More than 75 percent of those enrolled in the program received more in UI benefits than they earned in their former jobs—making it more appealing to stay home even when their jobs were made available to them again. And the resurrection of a bonus at a lower amount would still pay more than work, threatening the economic recovery.
Once the UI boost expired at the end of July, however, our economic recovery picked up speed. It was no longer easier for states to lean into heavy-handed restrictions on businesses, and as a result, many Americans were able to return to work. Since July, more than five million fewer Americans are unemployed. Without the UI bonus in place to enable states’ decisions to institute economic lockdowns, businesses were given the chance to adapt to the pandemic—as we knew they would.
Only seven states refused to issue stay-at-home orders during the pandemic, and businesses in those states quickly adjusted to operate under these new circumstances. They didn’t need government to threaten their existence to make changes to their business practices because the economic principles of consumer demand already did that. Consumers demanded the private sector enhance their safety and abide by health protocols, and according to the U.S. Department of Labor Occupational Safety and Health Administration (OSHA), the businesses in these states were largely successful at meeting that demand. Just two establishments between all seven states are recorded as having coronavirus-related citations.
Now is the time to let businesses in all states rise to the occasion and adapt to our new marketplace. Eliminating the $600 weekly UI bonus was a positive incentive to states to loosen their restrictions and reopen, and any reinstatement of increased UI benefits would be a step backward.
It’s clear that—like the rest of 2020—this holiday season will look different. Travel is restricted in many states. Families aren’t able to gather as easily. And sadly, millions of Americans remain out of work. In Washington, Democrats continue to negotiate for additional unemployment insurance benefits in another COVID-19 relief package. But out in the real world, Americans don’t need another government handout—they need their jobs back.
Joe Horvath serves as a senior fellow at the Foundation for Government Accountability. He was previously the Yankee Institute's director of legislative outreach and a public policy research analyst for the American Legislative Exchange Council.