It’s as if every adult in New York City just got laid off last week, the week after every adult in Los Angeles got canned.
The 6.6 million new jobless claims last week, combined with the 3.3 million the week before, means a stunning 10 million people have been laid off in just two weeks. That’s 10 times worse than any previous two-week stretch.
It’s good that Congress has expanded unemployment insurance to take care of these 10 million — and the millions that will lose their jobs in the coming weeks. But even if these many millions get enough in unemployment benefits to pay their bills, America suffers greatly, both socially and economically, from the layoffs.
Our government should have acted to prevent the layoffs rather than simply mitigate the effect of the layoffs. They should now act very quickly to prevent further layoffs, possibly by passing a massive bill to cover payroll for every business whose revenue is harmed by the coronavirus and the shutdown (which, yes, would be nearly every business).
Maybe there’s another solution. Maybe the CARES Act’s Paycheck Protection Program can be implemented in a more direct and robust way. But the goal of federal policy these days should be keeping as many people in their current jobs as possible.
Why?
Because separating workers from their employers is bad for both, even if the government is able to keep money flowing to both.
People do better when they have a job, or something akin to a job such as full-time school or parenting. These days, many people simply cannot work because their employers cannot allow them on-site, or because their work would be too risky. While some of us joke about the joys of idleness, this separation from work will cause suffering in terms of mental health, drug abuse, alcohol abuse, weight gain, and so on.
But the harm from work lost could be lessened if we could prevent both the income loss and the employment loss. That is, idle folks (or crazy-busy new-homeschooler folks) on payroll are better off than the same folks on unemployment.
Most tangibly, people on payroll will have more assurance that their job is still waiting for them when the coronavirus and the shutdown start to lift. Maybe more importantly, they will still belong to something important: their workplace.
Belonging is a key to happiness and the good life, and maladies such as deaths of despair, divorce, depression, and anxiety are rooted in a lack of belonging.
Think of it this way: A job provides work, belonging, and money. Unemployment insurance can provide the money. Nothing these days can provide the work. Subsidizing payrolls, though, can preserve the belonging.
Employers benefit, too, if they can afford to keep workers on payroll. Many of them want to flip the lights back on as soon as possible. Laying off workers makes that harder.
“Businesses who lay workers off will have to incur the cost of recruiting and retraining new workers,” labor economist Mike Strain at AEI explains.
“Those costs can be significant, especially for small businesses where workers need a lot of job-specific knowledge. If we can keep workers on payroll — even if there is little for them to do — then firms can avoid those costs. In addition, keeping those workers on payroll avoids the process of unemployed workers and employers finding good matches once the crisis lifts. The economy could snap back much more quickly if workers remain attached to their employers throughout the crisis.”
The Treasury Department is supposed to roll out the Paycheck Protection Program on Friday. It looks like it may be pretty weak at keeping people on payrolls. It certainly didn’t stop the 10 million who already lost their job.
Whether through better implementation or a new law, we need to move quickly to make sure people who may not have work, at least have employment.
