Contrary to the increasingly widespread view, I think the U.S. reliance on unemployment insurance is likely to be a *better* way to maintain employment relations than if we had partially reimbursed employers to keep non-working workers on payroll.

To a 1st approximation, for future employment prospects there is no difference between furloughing a worker and them getting a check from the government and keeping a non-working worker on payroll getting a check from their employer which is then reimbursed by the government.

Macy's furloughed most of its 130,000 workers. They're getting roughly what they made from Macy's from UI (in many case they're actually getting more from UI). And if/when Macy's can return it will reactive these workers. The employment relationship was not severed.

For a 2nd approximation, consider that in Denmark employers pay 25% of the cost of non-working workers. In the US it is 0%. Paying 25% of the cost of a non-working worker is a lot for a business that is shut down and is an incentive to fire them instead of furloughing them.

Moreover, a business that has to pay costs for non-working workers will be less likely to survive or if it does it will be less likely to be in a position to hire again.

(All of this is different if you also have Danish labor unions and tripartite bargaining, but we don't.)

In addition, reimbursing employers for their payroll is equivalent to having a social insurance system financed by short-term loans from businesses to the govt. That is the opposite of what we should be doing now--hard hit business need to be receiving loans not making them.

From the perspective of workers, having to apply for UI is definitely worse than being kept on payroll while not working. But at least the U.S. system gives low-income workers even more than they were getting on the job. And hopefully some businesses to return to.

Also, as imperfect as UI is we know that it works (eventually). I would much rather rely on that than a inventing a new program mid-stream. And even with that new program we would still have needed greatly expanded UI to deal with everyone who was laid off anyway.

I do expect Denmark and some other countries to have a better employment trajectory because of their institutions and ability to have nationwide bargaining, but that was never an option in responding to the COVID crisis in the United States.

I also expect countries like Germany to do better because they provide short-time compensation, effectively pro-rated unemployment insurance for workers who are forced to work part time. Any effort to expand this in the United States is critical.

Finally, this is not just a temporary interruption in activity but also a large-scale, long-term reallocation of labor across sectors in the economy. Having instutitons to facilitate this is critical. Looking forward this is an important area to focus on.