Disincentive Crisis: Many States Pay Families Unemployment Benefits Larger Than Job Salaries

Amid an ongoing labor crisis, with businesses across the country continually struggling to fill open worker slots, two economists say part of the problem may stem from roughly a quarter of all U.S. states paying citizens sky-high unemployment benefits that sharply disincentivize working.

The report, published this month by the Committee to Unleash Prosperity, points to a rash of state-level policies that offer generous payouts for workers who are currently unemployed.

The writers — University of Chicago economics Professor Casey Mulligan and Heritage Foundation economics research fellow EJ Antoni — argue in the paper that in 14 states, “unemployment benefits and [Affordable Care Act] subsidies are the equivalent to a head of household earning $80,000 in salary, plus health insurance benefits.”

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In three states — Washington, Massachusetts and New Jersey — the researchers found that unemployment benefits could top $100,000, with Washington offering $122,000 in payouts.



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