Unemployment impacting the economy

This pandemic has surely changed life for everyone.

With less economic activity, small and medium sized business are struggling to stay afloat and employees are leaving to collect their unemployment checks.

Although the government is handing out help, these "helps" could be triggering negative second-order effects. How? Well, large groups of workers are deciding to stay at home and collect their unemployment checks rather than going out to find work and contribute to economic output.

That's a huge problem. The less people we have producing something, a service or product, the less economic output we're producing as a country.

Federal Minimum Wage

The federal minimum wage in the United States of America (which includes Puerto Rico) is $7.25 per hour.

At this rate, working full-time earns you about $290 per week, pre-tax. But if you solicit federal unemployment you could receive about $200 per week and pay no tax on that income.

So, what would you choose? Stay at home watching Netflix until things get better or would you go back to work sweating, dealing with customers, and listening to your boss? Both at almost the same monetary reward.

Most people would choose to receive the free money and watch Netflix.

And that's what's wrong.

Instead of giving free money, perhaps the government should establish a framework to decide how this money should be spend and aim to make it productive capital rather than dumb capital.

I'm not advocating to stop the monetary help, as there are millions of people who really need the money, but we need to figure out how to encourage others to choose to earn money rather than receive it.

Not everyone is really impaired or unable to work. But there's simply little incentive to get back to work.

It's great to know that our country has our back during these tough times, but we should be thinking on how to give back to our country during these times.

Finding work is one way. Locally or remote.

If you're at home and need to learn something new or want to find work, here are some resources that can help:


Learn something new