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Conservative Leaders: End Perverse Incentives Keeping Workers Home

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As (mostly) Democrat governors continue to keep their state economies on lockdown, employers in states that are reopening have discovered that the benefits Congress enacted to help those who were temporarily laid off have given some employees an incentive NOT to return to work.

What started as a virtuous incentive to stay home and “flatten the curve” has become a perverse incentive to stay off the job. Many employees find they are compensated just as well — or even much better — on the extended unemployment benefits than they were when working. The extended unemployment plus $600/week bonus is just too attractive. This is a classic “barrier to entry” in economic terms.

Now a group of conservative leaders have penned an open letter to Republicans in Congress and President Trump urging them to fix the distortions that created this barrier and urging that in the future they refuse to adopt policies that create further barriers disincentivizing people from returning to work.

The full text of the letter follows:

An Open Letter to President Trump and Congressional Republicans

May 20, 2020

America is re-opening! That’s the good news. But it’s not going smoothly. Much attention has been given to government orders barring operation, however, the businesses that are allowed to re-open are finding a different challenge.

We have some policy recommendations based on experience and real world observations.

As small business owners, franchise operators, and entrepreneurs eagerly start safely re-opening their businesses, they are running into roadblocks. We see it in person from a hair salon in Houston, to an ice cream parlor in Florida, to restaurants all across America. Managers can’t get their employees to return to work.

No matter the dearth of local COVID cases or the establishment’s strict safety precautions, employees are incentivized to refuse to return to work. By the government!

What started as a virtuous incentive to stay home and “flatten the curve” has become a perverse incentive to not work. Many employees find they are compensated just as well — or even much better — on unemployment than they were working. The extended unemployment plus $600/week bonus is just too attractive. This is a classic “barrier to entry” in economic terms.

Republicans in Congress and President Trump must fix the distortions that created this barrier and refuse to adopt policies that create further barriers disincentivizing people from returning to work. Federal Reserve Chairman Jerome Powell is wrong in suggesting we need “additional fiscal support.” We need the government, at all levels, to get out of the way!

A franchise manager observed, “These young people just don’t realize that unemployment doesn’t last forever.” Maybe not, but current expanded benefits are promised to last long enough and pay well enough that they cannot justify going back to work. It is an entirely rational decision.

IF WE ARE GOING TO SUCCESSFULLY RE-OPEN AMERICA — Congress must fix the unemployment payments distortion with new rules:

Unemployment benefits cannot exceed the individual’s previous level of earnings.

Individuals who are offered their previous job and refuse it are ineligible for payments.

At a minimum, individuals who are offered their previous job and refuse it are ineligible for the bonus $600/week payments.

Congress and the President cannot allow the Democrats to extend the current exorbitant unemployment provisions indefinitely, especially beyond the phased reopening in each state. This will simply thwart state’s plans by incentivizing workers and businesses to remain in shutdown.

The Democrat Socialists definitely cannot be allowed to enact their plan to provide a minimum income to everyone whether they are willing to work or not. This will create a permanent under-class and further divide America by social/economic classes. The disincentive to employment will be raised to a point where too many Americans will just choose to be wards of the state rather than work to achieve the American Dream.

As you well know, people who are effectively wards of the state vote for politicians who promise to perpetuate the largess.

We are all focused on re-opening, but we must also focus on laying the groundwork to allow it to succeed.

(Organizations listed for identification purposes only.)

Tim Wildmon – President, American Family Association

Ginni Thomas – President, Liberty Consulting

Rick Manning – President, Americans for Limited Government

Peter W. Wood – President, National Association of Scholars

LTG (Ret.) William G. Boykin, US Army – Executive Vice President, Family Research Council

Jenny Beth Martin – Honorary Chairman, Tea Party Patriots Action

Cathie Adams – 1st Vice President, Eagle Forum

Beth Biesel – Forum Chief, American Liberty Forum

Pat Carlson – National Environmental Chairman, Eagle Forum

Cindi Castilla – President, Eagle Forum Texas

Stephanie Coleman – Executive Director, Liberty Action Network

Dr. Tim Daughtry – Author and Consultant, Daughtry & Company

Becky Gerritson – Executive Director, Eagle Forum Alabama

Cindy Honcoop – State Director, Eagle Forum Washington

Paul Hood, CPA – President, Hood CPAs

Sheryl Kaufman – Corporate Chief Economic (retired), Phillips Petroleum Company

Rick Trader – Producer/ Co-host, Conservative Commandos Radio Show

George Landrith – President, Frontiers of Freedom

Rosina Kovar – Member, Eagle Forum

Elaine D. Little – Vice President, Eagle Forum Alabama

Dr. Everett Piper – Columnist and Author; President Emeritus, Oklahoma Wesleyan University

George K. Rasley, Jr. – Managing Editor, ConservativeHQ.com

Sandy Rios – Director of Government Affairs, American Family Association

Jake Hoffman – President and CEO, Rally Forge

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