The Real Issue Exposed by the Unemployment Benefits Debate in the United States

There’ve been some studies suggesting that many Americans that were on unemployment benefits with the old amount (which included the $600 a week enhanced unemployment benefits)—maybe even close to 70% of Americans on unemployment benefits—were receiving more money from their benefits than from the jobs they used to hold.[1] That seems to be why the matter of unemployment benefits became such a contentious debate.

Those advocating for less generous unemployment benefits during COVID believed that the issue was with the benefits being way too large, to the point of potentially dissuading some from seeking work. I’d argue, though, that the issue is misdiagnosed—the issue is that so many employers are so outrageously cheap that the bar for “generosity” has been set so low.

Consider the fact that an American on unemployment benefits was receiving, on average, $921 a week.[2] That amounts to $47,892 if you extend that for an entire 52-week year—an amount still low enough that it would not cross the threshold to a living wage for a family of three in even the most affordable states in America.[3] In other words, individuals were (on average) receiving less than the equivalent of a living wage, and that was still more generous than what most Americans on unemployment benefits were receiving from their previous employers. Considering that fact, the issue is that most employers of these former employees did not think their employees were worth enough to pay them a living wage, so that employees can easily afford rent, groceries, utilities, and many other basic items. Full stop.

The systemic issues that have led to such low wages for so many Americans may take years, if not decades, to address (if they get addressed). In the interim though, we should stop saying that unemployment benefits were “too generous”—instead, many former employers were not generous enough.