It& #39;s not time yet, but when we re-open and plan to incentivize workforce re-entry, we will need to revise our UI plan.

Here are a few initial thoughts.

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First, the PUC ($600/week boost) is a very important component of pandemic relief. We will likely need to extend it further in duration.

But eventually we will need to have wage replacements <100%.

At the same time, we should use this time to reform UI as well.

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One option to consider: don& #39;t have a cliff where the PUC goes from $600 to $0. Instead have it fall more gradually which better incentivizes labor force re-entry, especially if there is habit formation.

https://academic.oup.com/qje/article-abstract/132/4/1969/3796325

3/">https://academic.oup.com/qje/artic...

Overall wage replacements are quite low in many states and we can push to raise these as part of a reform.

While literature on UI generosity & re-entry wages is mixed, a more generous UI (but which declines) could help with raising re-entry wages.

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https://twitter.com/ernietedeschi/status/12497175800902">https://twitter.com/ernietede...

When we are trying to re-incentivize labor market entry, but when there is uncertainty about health benefits, we should provide some hazard pay - carrot and not just stick of losing UI.

5/.

Finally, we need a broader UI reform that establishes clearer federal standards, including on federal funding based on triggers. It& #39;s insane only 25% of unemployed access UI! We need a well functioning UI to help guide workers into good matches while providing insurance.

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PS. Here is the figure from @ernietedeschi with replacement rates by states:



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