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With coronavirus cases rising in much of the country and more than 30 million Americans without a job, enhanced unemployment benefits will end next week. This will leave millions of Americans, who lost their jobs because of the virus, unable to pay bills and, in some cases, buy necessities such as food.
Congress can quickly fix this by passing legislation to continue extra unemployment benefits. A stand-alone bill to extend these benefits is likely to be necessary because there is disagreement in Congress over what should be included in a larger stimulus package, slowing progress on other important aid, including financial support for state, municipal and tribal governments.
The Federal Pandemic Unemployment Compensation program, created as part of the $2.2 trillion stimulus bill passed in late March, gives workers $600 per week on top of regular unemployment benefits. The average unemployment payment during the pandemic was $ 1,000 a week, according to the Federal Reserve Bank of St. Louis. About 72,000 Mainers received the enhanced funds for the week ending July 18, according to the Maine Department of Labor.
That extra compensation expires at the end of July.
The U.S. House has already passed a stimulus package that includes an extension of this benefit.
A Senate bill remains in flux, but a Republican version that was discussed this week is likely to include enhanced unemployment benefits, although at a lower rate, likely between $200 and $400 a week.
Many lawmakers want to lower the benefit because they believe that many Americans are making more money through unemployment than they could by working and are therefore refusing to go back to work. They are right that many Americans who lost their jobs did receive more in unemployment benefits than they did in wages, which is an indication of the low incomes of the Americans who are out of work. However, workers can only refuse employment and continue to collect benefits under specific circumstances, such as a lack of childcare or unsafe working conditions, and those individual situations are reviewed by state labor departments.
The Republican leadership of the U.S. House and Means Committee, which offers a Q&A on the pandemic-related unemployment benefits, makes it clear that workers cannot refuse a job because they make more through unemployment insurance (UI).
“States permit a number of valid reasons for turning down a job. But making more money on UI is not one of them,” it says on its website. “If you don’t take the job and don’t have a valid reason, you are not eligible for UI and could be at risk of committing fraud.”
The Maine Department of Labor includes similar language in its frequently asked questions: “If [the department] determines that an offer of suitable work was made and that there was no valid reason to refuse it, the person would no longer receive unemployment benefits including the additional $600.”
When setting a dollar amount for enhanced unemployment benefits, lawmakers should focus on the individual and nationwide gains that come with these benefits.
Economists agree that higher unemployment benefits will do the most to help families and to boost the economy, which could tip back toward recession if more businesses don’t reopen and consumers don’t start spending more money.
“Definitely the $600 in unemployment insurance is the best bang for the buck — it goes straight to people without earnings so it all gets spent,” Michele Evermore, senior policy analyst at the National Employment Law Project, told the Sacramento Bee.
Analysis by Mark Zandi, the chief economy at Moody’s analytics, found that $1 in unemployment benefits generated $1.61 in economic activity a year later, one of the highest rates of return and far outpacing tax cuts.
“No form of the fiscal stimulus has proved more effective during the past two years than emergency [unemployment insurance] benefits,” Zandi said in testimony to the Senate Finance Committee in April.
That’s especially true during the coronavirus-related downtown, which is driven in large part by depressed consumer demand for goods and services. Without the higher unemployment benefits, which translates into more money to spend, demand would be even lower, which would lead to even higher unemployment.
The Economic Policy Institute calculates that ending the $600 a week benefit would reduce employment in Maine by more than 18,000 jobs. Extending the benefit for a year would increase Maine’s overall personal income by more than $3 billion, the institute calculated.
Beyond these numbers, the enhanced benefit allows millions of low-income Americans, most of whom have only a couple weeks worth of savings, to pay for necessities such as housing and food. Even with the higher benefits, one in five Americans were behind on their rent and 26 million adults and 7 million children did not have enough to eat in early July, according to new analysis by the Center for Budget and Policy Priorities.
If the $600 a week benefit disappears, those numbers will rise.
Continuing a higher unemployment benefit is necessary for the wellbeing of millions of American families and of the U.S. economy.