In a little more than a week, federal bonuses of $600 a week to the unemployed are set to expire. If that happens, our economy, which has managed to chug along if a little crippled since the coronavirus pandemic began in March, could face real catastrophe.
The federal bonus, which was part of Congress’s CARES Act, passed in late March, provides an additional $600 a week to state unemployment benefits. Those payments are often larger than any funds a state program would give. In Pennsylvania, the typical maximum benefit is $573 a week. The federal program more than doubles the take home wages of anyone in the state who qualifies for the benefit.
Some Republicans have expressed concern that such a generous federal program will continue to disincentivize work. Repeating his party’s mantra on the matter, Texas Republican, Sen. John Cornyn said, “We should never pay people not to work. We should try to help people get back to work.” As policy, it fails to meet a moment when many have lost their jobs through no fault of their own, but instead due to a failure of leadership to make conditions suitable for work to begin with.
Not only that, but the benefits have been shown to work.
Today, according to CNBC, more than 32 million Americans are collecting some form of unemployment. A study by JP Morgan Chase found that the CARES package program of delivering unemployment aid acted as designed – a stimulus that saw those receiving benefits as having continued or even increased their spending habits.
The JP Morgan Chase report gave credit to the CARES Act benefits as having significantly boosted the economy despite levels of unemployment that approached The Great Depression. Without that aid, there’s no way the country’s economy would not suffer mightily.
“The fact that spending by benefit recipients rose during the pandemic instead of falling, like in normal times, suggests that the $600 supplement has helped households to smooth consumption and stabilized aggregate demand,” reads the JP Morgan report.
Fox Business, in a July 17 story on the JP Morgan Chase study, reported that the Century Foundation estimates a discontinuation of the $600 benefit will affect more than 25 million Americans, many of who will see weekly benefits shrink to less than $400 a week. It is likely to drain $15 billion a week from the economy.
With much of the country continuing to reel from rising COVID-19 cases, hospitalizations and deaths, it’s not hard to imagine what will happen if those benefits are allowed to run out, or not replaced by something equally beneficial to those who have lost their jobs.
Ending people’s jobless benefits because you don’t want to disincentivize work in a climate in which the greatest disincentive to work is a pandemic that we’ve barely tried to control at the Federal level is not only craven, it also won’t help the economy. We can only hope cooler heads – both Democrat and Republican – prevail and pass a package to extend benefits to those who need them most: Unemployed workers.