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In late March, Congress passed the largest stimulus package in American history in an effort to offset the economic impact of the coronavirus pandemic. One of the most important elements of the massive $2 trillion bill was a provision that boosted unemployment insurance benefits for those who lost work because of stay-at-home orders designed to limit the spread of the virus.
Nearly 39 million Americans have filed for unemployment in the past nine weeks. The benefits are designed to replace a certain percentage of an unemployed worker’s lost income. The amount of money given out can vary significantly from state to state, from an average of $213 a week in Mississippi to $555 in Massachusetts. The stimulus bill added an extra $600 a week from the federal government to each of those state payments.
Those enhanced benefits are scheduled to end July 31 unless Congress votes to extend them. The issue is likely to be one of the key points of contention as Congress considers its next stimulus bill in the coming weeks. House Democrats passed a bill that would continue the $600 bonus through the end of January. Republican Sen. Lindsey Graham said the GOP would allow an extension “over our dead bodies.”
Why there’s debate
Opposition to extending the enhanced benefits centers mostly around the claim that the program will hold back the country’s economic recovery by giving people an incentive to stay home rather than go back to work. When combined with the average payout from states, a large number of workers are actually making more money on unemployment than they would if were to return to their jobs. Workers typically lose their benefits if they turn down a “suitable” job offer, but some conservatives worry that the scale of joblessness in the country would make that provision impossible to enforce.
This imbalance will ultimately cause businesses to suffer, Republican lawmakers argue, if employees refuse to accept what would effectively be a pay cut by going back to work when stay-at-home orders are lifted. The situation could also create resentment among the millions of essential workers who have remained on the job during the crisis for less pay than those who were laid off.
Proponents of continuing the enhanced payments say the extra money has helped stave off an even more severe economic collapse. Despite unemployment at levels not seen since the Great Depression, many people have been able to make ends meet thanks to the boost in benefits. The larger checks also mean people have money to spend, which helps businesses stay afloat. If the extra funds go away, the country could see a wave of evictions, foreclosures and other secondary economic impacts that result in a prolonged and severe recession, some economists have warned.
Others say incentives that compel workers to stay home are an important part of limiting the spread of coronavirus, which they see as the No. 1 priority. Not only would extending the enhanced benefits save lives, but lessening the severity of the outbreak would also ultimately benefit the economy more than a premature rush to push people back into the workplace, some public health experts say.
Republicans in the Senate have yet to release a plan for what might be in their next stimulus package, but Majority Leader Mitch McConnell said it “won't look anything like” the bill passed by Democrats in the House. The earliest any legislation could move forward will be the first week of June, when senators return from a weeklong recess.
Letting the extra benefits expire would cause a major shock in the economy
“When people’s incomes are stabilized, they pay their bills on time... and keep buying things. Since most workers who’ve been laid off are at the low end of the income spectrum and thus eligible for generous unemployment insurance benefits, the country has mostly avoided secondary shocks that would further exacerbate economic problems. So far.” — Matthew Yglesias, Vox
Generous benefits create backwards incentives that hurt the economy
“It’s obvious that this level of aid really disincentivizes productive activity in the market and it puts business owners in a terrible situation. A lot of small business owners, they are getting that green light to start reopening, but they’re worried that their employees may prefer to stay home and get paid for that.” — Kristin Tate, Fox News
Forcing people to go back to work puts their lives at risk
“Forcing people to choose between getting COVID-19 or losing their livelihood is inhumane. It is also nonsensical. Public health still depends on as many workers as possible staying home. That’s a big reason why Congress provided the extra benefits.” — Robert Reich, Guardian
The benefits are holding back the effort to reopen the country
“We can’t keep paying people extra to stay home for the entire rest of the year. We’re reopening, like it or not, and we need a safety net appropriate to our new circumstances.” — Robert Verbruggen, National Review
The money is helping millions of people make ends meet
“It’s a good bet that at this point most though not all of the loss in wages caused by social distancing is being offset by increased government aid. ... Unemployment assistance, after a troubled start, is doing a lot to help American workers.” — Paul Krugman, New York Times
People shouldn’t make more money staying home than they do working
“Some extra unemployment insurance is necessary, but the rich extra compensation from the $2.2 trillion Cares Act is encouraging those employees to stay home.” — Editorial, Wall Street Journal
People are unlikely to choose unemployment over a steady job
“People go back to work for all kinds of reasons. People want that stability, they want their health insurance and any contribution to retirement that they might have been getting. And so once you factor all that in, you know, getting a little bit of extra money for a couple of months doesn't compare.” — Employment policy expert Michele Evermore to ABC News
Giving extra money to the unemployed helps the whole economy
“When the economy is in a deep hole, as it is today, sharply reduced unemployment benefits for tens of millions of unemployed Americans mean less spending, less demand and less economic activity. ... Lawmakers didn’t toss in the extra $600 a week because they wanted to make life cushy for laid-off low-wage workers. They did it to try to keep the economy going in spite of the collapse in demand.” — Jon Healy, Los Angeles Times
The benefits should continue, but they should be smaller
“Americans in trouble should get the support they need without becoming wards of the state. A compromise between current Republican and Democratic approaches to unemployment insurance can give us just that.” — Henry Olsen, Washington Post
Unemployment laws don’t allow people to simply decide to stay home
“For the majority of Americans, there is no actual choice between collecting unemployment benefits and returning to work. This means that the question of whether benefits disincentivize work isn’t germane.” — Shahar Ziv, Forbes
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