Enhanced unemployment benefits included in the $ 1.9 trillion pandemic relief package signed by President Biden on Thursday could stimulate the economy billions of dollars a week to pour into the economy over the summer.
The plan expands on two pandemic-related programs and extends additional $ 300 payments to all laid-off workers receiving unemployment benefits through early September – long after the effect of $ 1,400 checks on individuals likely fades. About 20 million people were on unemployment benefits in mid-February, up from 2 million a year earlier, which equates to more than $ 10 billion in additional incentives each week.
Some economists say extending additional unemployment benefits for nearly 18 months is a disincentive for some people to return to work, preventing industries such as logistics, construction and certain retailers from finding workers as the economy recovers.
Other economists say the payments have boosted many lower-income families, who disproportionately lost jobs during the coronavirus pandemic, while in turn pushing money back into the wider economy. According to the Department of Labor, the US had 9.5 million fewer jobs in February than a year earlier.
“It’s better, but we still have a huge job hole,” said Heidi Shierholz, a Ph.D. economist at the Economic Policy Institute who served in the Obama administration. “Unemployment benefits will help some people through what can still be very difficult for the next few months,” she said.
The law allows unemployed workers, including the self-employed and others who are generally not eligible for any benefits, to access unemployed help until September 6. With the $ 300 weekly increase, the average weekly unemployment benefit for those eligible through regular state programs is about $ 620. Per week, according to the Department of Labor, about the equivalent of working full-time at $ 15.50 an hour.
Someone who receives the average level of benefits since March last year would have received about $ 30,000 over the course of the past year. The extension could allow that person to receive about $ 15,000 more.
Economists expect economic stimulus and an easing pandemic to boost economic growth to nearly 6%, which would be the fastest pace in nearly 40 years. However, additional government spending over the past year has caused federal deficits to soar and run the risk of fueling inflation.
There were 6.9 million job vacancies in the US at the end of January, the Labor Department said Thursday, slightly less than a year earlier, just before the pandemic hit. But there are more vacancies in some areas.
Indeed.com job search site said there were nearly 40% more job openings in manufacturing and warehouses at the end of February, compared to a year earlier. Pharmacy and building openings were up more than 30%.
President Biden has passed the $ 1.9 trillion Covid-19 bill into law, giving Americans an economic boost. WSJ’s Gerald F. Seib explains what’s on the bill and why it’s important to Biden’s administration. Photo illustration: Laura Kammermann
Extended benefits are a barrier to hiring for employers in those industries, said Marianne Wanamaker, a Ph.D. labor economist at the University of Tennessee who served in the Trump administration.
“By giving people a piece of cake, you are diminishing their ability to go back to work,” she said. “And we know that the longer people don’t work, the more they struggle to get back.”
Those who have been out of work for a year or more can see skills decline and face a stigma surrounding a long unemployment gap on their resumes. They also make changes to their lives, such as moving in with family members, which can lead to them dropping out of the workforce, said Dr. Wanamaker. “A mismatch between labor supply and demand is a recipe for higher inflation and slower economic growth,” she said.
Recent Labor Department guidelines allow some employees to decline job offers and retain benefits if they believe the workplace is unsafe. Typically, laid-off workers must be actively looking for a job in order to receive unemployment benefits. Some people have not restarted their job search because their children’s schools have not fully reopened or are worried about getting sick.
Dr. Shierholz said most people would choose a permanent job rather than stay on temporary unemployment benefits that would end in September. “And if people take a little longer to find jobs, it could be a good thing for them and the economy,” she said. “They can find jobs that match their skills and interests, where they can be more productive and likely to pay more.”
Some employers say the $ 300 increase provided this year is more manageable than the additional $ 600 in weekly payments included in the initial government support package passed by Congress and signed by the former last year. president Donald Trump. Those payments ended in July 2020.
A handful of employees at Hoffman Car Wash locations in Albany, NY, asked not to be recalled last spring because their unemployment benefits paid more than they earned cleaning cars, owner Tom Hoffman Jr. said. $ 300 has not led to the same problem, and that he has recently been able to find the workers he needs.
He said his business has been down since 2019 as people drive less and some customers are reluctant to have their car’s interiors cleaned, the most labor-intensive service.
“I think the $ 300 will be useful to those out of work,” he said. “It’s nowhere near the discouragement like the $ 600 we saw last year.”
Write to Eric Morath at [email protected]
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