Can Ohio Unemployment Be Extended?

Is a Bonus for the Unemployed Right?


At first glance, it seems obvious in times of crisis to support the unemployed with aid. But the question arises as to which incentives are created. Some economists point out that higher unemployment benefits - especially in combination with low incomes - can result in those affected having less money available if they accept a job. Is that also threatened in the case of a monthly corona bonus of 150 euros?

The corona economic slump is special because the state has caused it artificially through restrictions. This skyrocketed the number of unemployed, but there was a sharp division by area. Sales rose in the grocery and drugstores, and some producers of important health and hygiene products suddenly needed twice as many employees. There is a shortage of staff in childcare when employees have to be in quarantine.

The contact tracer job came up overnight, and hundreds of them are missing, as evidenced by reports of long waits. With earnings of 1100 to 1800 euros gross for the often ungrateful work of calling people afterwards, a grant of 150 euros may tip the scales to reject the job offer. A contact tracer bonus would be more effective, goes the argument.

Another objection to a subsidy for the unemployed is the limited effect on the economy. After all, the measure cost 180 million euros for the first three months. According to the economists surveyed, a boost to investments would be more effective, especially in those times when government restrictions trigger a need to save because shops and restaurants are closed.

One final point of criticism: If the bonus for the unemployed is extended regularly, it could establish itself as a higher unemployment benefit in the long term. That would take away the leeway to fundamentally reform the system in order to better harmonize incentives and benefits over the duration of the benefit. (Leopold Stefan, October 24, 2020)