Oregon Senator Ron Wyden (D) says the dramatic spike in unemployment in April, caused by the novel coronavirus, requires Congress to take additional action.
“This is a hellaciously powerful one-two economic punch, because it is gigantic in size and it happened virtually overnight,” Wyden told Yahoo Finance’s “On the Move” on Friday, after the crushing jobs report was released.
A record 20.5 million jobs were lost in April, and the unemployment rate rose to 14.7%, its worst reading since the Great Depression. Congress included a $600 weekly addition to unemployment benefits in the coronavirus stimulus law known as the CARES Act — but that additional benefit is set to expire at the end of July.
Wyden, the ranking member on the Senate Finance Committee, wants Congress to extend the extra $600 benefit until a state’s unemployment rate falls below 11%.
“What I am proposing is a market-oriented approach,” he said. “I would, in effect, put in place a trigger that would tie the benefits to the unemployment rate. And of course, with the rate soaring through the roof, that means workers are still going to need a boost.”
Under his plan, the additional benefits would gradually phase out by $100 for each percentage point decrease in the unemployment rate.
Worst unemployment since 1939
Wyden wants to prioritize measures in the next round of COVID-19 economic stimulus that “protect those folks who really got left behind” and simplify compliance measures for small businesses that utilize the Paycheck Protection Program (PPP) to keep paying employees while their businesses are closed.
A spokesperson for Senate Finance Committee Chairman Chuck Grassley (R) told Yahoo Finance making anything automatic right now doesn’t make sense.
But Wyden said, “I think that Republicans are going to have problems stiff-arming workers anymore, given these new numbers.”
Higher minimum wage
Democrats on Capitol Hill say they wanted full wage replacement for the more than 33 million Americans who’ve lost their jobs in the last seven weeks. Wyden says as the economy recovers and those people go back to work, the focus will be on raising wages.
The federal minimum wage, $7.25, has not been increased since 2009. “I think that when you look at the minimum wage in some of these states, people aren't going to be able to pay for groceries and rent and their medical bills,” Wyden pointed out. He supports raising the minimum wage but says his focus is on the immediate unemployment crisis.
“The Congressional Budget office has made it clear that we are looking at unemployment in very significant numbers for quite some time into the future,” he said. Wyden suspects whole sectors of the U.S. economy will look very different after COVID-19. But, he added, “What I try to do is focus on objective criteria.”
Adam Shapiro is co-anchor of Yahoo Finance’s On the Move.