The extra $600 more than 25 million Americans have been receiving since April has helped bring back some of the 7.5 million jobs that were added last month, economists say.
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Beneficiaries of the extra $600 in weekly benefits that unemployed Americans are receiving as part of the $2 trillion CARES Act may not be the only ones who lose out if lawmakers don’t extend or replace the extra benefits by the July 31 deadline.
Less money to spend in stores and online could translate into more layoffs on top of the nearly 30 million Americans who have been laid off amid the pandemic, some economists say.
“Letting the $600 expire would be the economic equivalent of reopening the economy too soon,” said Michele Evermore, a senior policy analyst at the National Employment Law Project, an advocacy organization focused on workers’ rights.
“I really worry about what happens to people getting benefits now who might lose them, but also the person next door who’s been able to keep their hardware store open because of them.”
If the $600 expires, 5.3 million jobs could be lost by the end of 2021, according to Josh Bivens’ calculations, an economist at the left-leaning Economic Policy Institute. A $300 reduction would result in half as many losses by 2021, Bivens told MarketWatch, but would still be “a disaster.”
“ ‘I really worry about what happens to people getting benefits now who might lose them, but also the person next door who’s been able to keep their hardware store open because of them’ ”
“We shouldn’t assume we’re on a glide path to recovery – I strongly suspect we’ll see job losses in July as the virus has resurged and people have reimposed social distancing in many places,” Bivens said. “Taking away or paring back [unemployment benefits] on the assumption that we’re on a smooth path to recovery is hence really premature.”
The supplemental unemployment benefit has been a contentious issue amongst lawmakers
Republicans hold that the additional $600 in unemployment benefits discourages people from returning to work, especially the two-thirds of Americans who now collect more money in unemployment benefits than they did from their jobs, according to economists from the University of Chicago.
On top of which, last month the U.S. added 7.5 million jobs, which many Republican lawmakers view as a sign of economic recovery and therefore see no need to offer supplemental unemployment benefits.
More recently Treasury Secretary Steven Mnuchin said that the Trump administration would consider tacking on supplemental unemployment benefits in the next stimulus package that are “no more than 100%” of a workers’ prior wages.
“ We shouldn’t assume we’re on a glide path to recovery – I strongly suspect we’ll see job losses in July as the virus has resurged and people have reimposed social distancing in many places ”
Democrats say that supplemental unemployment benefits are necessary to help millions of Americans pay for rent and other crucial expenses. It is unlikely that the Democratic-controlled House will sign off on a stimulus package that doesn’t include supplemental unemployment benefits, policy experts say.
Also see: Republicans will start work in Senate on $1 trillion coronavirus relief package, Mnuchin says
Is $600 a week too generous?
The U.S. Chamber of Commerce, a lobbying group for businesses, thinks so.
However, the group recognizes that the extra benefits have allowed many Americans to spend money, which supports jobs. The Chamber is pushing for a maximum of $400 in extra weekly jobless benefits.
“Withdrawing the $600 risks significant individual hardship as well as a drop in consumption that holds back economic recovery,” Thomas Donohue, CEO of the U.S. Chamber of Commerce, said in a letter to McConnell and House Speaker Nancy Pelosi.
Evermore, however, said $600 is just the right amount of supplemental benefits.
“Lower-income people are spending it all,” she said. It has also given them “the ability to say no to taking dangerous jobs.”
Mnuchin said he and White House Chief of Staff Mark Meadows will be meeting with Republican senators on Tuesday regarding a forthcoming stimulus package. Later in the day, they will be meeting with Pelosi and Senate Minority Leader Chuck Schumer, CNBC reported.
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