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$ 600 a week
When Congress issued $ 600 a week unemployment benefits in the spring as part of the CARES Act, the backlash was swift and fierce.
The purpose of the infusion, coupled with the typical state benefits, was to completely replace lost wages for the average worker – nearly $ 1,000 per week. (Typical state benefits generally replace half of lost wages.)
But many workers, especially those on lower wages, earned more unemployed than at work.
Many conservative lawmakers denounced the policy as a discouragement to return to work. Such dynamism would prevent the economy from making a rapid recovery, they argued.
Democrats argued the improvement was a necessity. Millions of people relied on the income support to pay bills and put food on the table, at a time when finding a job was challenging and keeping people at home to prevent the spread of the coronavirus made sense, they said.
Numerous studies have shown that the $ 600 stipend had no negative effect on the job market. All in all, it didn’t stop people from seeking employment or getting them out of a job, they found. Companies had no problem recruiting vacancies.
“There weren’t enough jobs and too many people were out of work,” said Ioana Marinescu, an assistant professor of economics at the University of Pennsylvania who co-authored one of the studies. “It just wasn’t a big-scale problem.”
Tug of war reappears
The supplement was canceled in July. Democrats wanted to extend it, but Republicans were against it.
This time, lawmakers seem less outspoken about their opposition, but the aid law shows they are still thinking about it, labor experts said.
“It’s left over from the $ 600 concern,” said Andrew Stettner, a senior fellow at the Century Foundation, a progressive think tank. “[The legislation] tries to empower all states on this issue. “
A $ 300 cash injection may now have a greater discouraging effect, given the improvements in the job market since the height of the crisis, Marinescu said. But it’s not a major concern, she said, given that there is still a job shortage and the economy has not recovered so strongly that it would pose a threat.
“It’s just not that bad, and we need the incentive,” she said.
In addition, fewer workers would surpass full wage replacement with a $ 300 boost, which is half the CARES Act grant and the same amount as a Lost Wages Assistance program set up by President Donald Trump over the summer.
According to an analysis by Ernie Tedeschi, an economist at Evercore and a former Treasury Department official, the average person would replace about 85% of their pre-discharge salary with an additional $ 300.