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The coronavirus rescue package signed into law Friday includes an unprecedented provision. The Cares Act increased unemployment insurance, providing total income replacement for the average worker who loses a job due to the mandatory public-health measures being instituted across the country. This aspect of the legislation calls into question the conventional economic wisdom about minimizing unemployment payments to incentivize work, especially during a crisis. 

Never before has the “replacement rate” for unemployment insurance matched prior earnings, nor has it applied to so many workers. Typically, workers receive less than half their prior earnings when collecting unemployment insurance. A progressive structure—where lower

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