Trump administration wants to replace $600 unemployment benefit with back-to-work bonus
However, in their current form, Portman’s and Brady’s policies each have a July 31 end date — the same expiration date as the $600-a-week benefits.
Democrats, on the other hand, want to extend enhanced unemployment benefits. They passed financial relief legislation in the House that would extend the $600 benefits until early next year.
Some Democrats have also proposed gradually reducing the aid by tying it to economic metrics like the state unemployment rate. (In other words, weekly benefits would decrease as a state’s unemployment rate falls.)
Lawmakers will likely compromise and extend enhanced unemployment benefits in some form after July to avoid sending household income over a “cliff” for millions of Americans, according to Ernie Tedeschi, an economist at Evercore ISI.
That’s because states generally replace between 30% and 50% of one’s prior wages, Tedeschi said. (The $600-a-week enhancement aimed at fully replacing job wages for the average worker, who makes about $1,000 a week.)
“That [would be] a giant benefit cut,” Tedeschi said.
Republican proposals leapfrog off an unexpected addition of 2.5 million jobs to the U.S. economy in May, versus an expected loss of around 7.5 million.
States are beginning to reopen their economies and many businesses that received Paycheck Protection Program loans have rehired workers to fulfill a condition of getting that federal aid.
“This is a turning point in the economy,” Kudlow said. “Besides the great jobs numbers, you’ve got a lot of positive green-shoot indicators. We don’t want to interrupt that [by extending unemployment benefits].”
However, critics say it’s naive to think all Americans who lost their jobs since mid-March will be able to return to work by the end of July.
Twenty-one million people are still unemployed. There would need to be nine more months of job growth similar to those seen in May to roughly get back to employment levels in February.
If enhanced unemployment aid ends, potentially coinciding with businesses running out of loan money and households exhausting the one-time stimulus checks they received, Americans may cut spending significantly and cause another wave of job losses, according to economists.
Ioana Marinescu, an economics professor at the University of Pennsylvania, has a policy idea that blends Democratic and Republican ideals, offering a view at what a potential compromise could look like.
The proposal would pay $600 a week to workers who have lost their jobs for about four months, regardless of whether they remain unemployed or find new employment.
This “job losers’ stimulus program” would keep unemployment benefits intact during a time of fragile economic recovery and also remove any perceived disincentive to work caused by enhanced unemployment benefits, according to the proposal.
Article source: https://www.cnbc.com/2020/06/15/trump-wants-back-to-work-bonus-instead-of-600-unemployment-benefit.html