Extra $600 in unemployment benefits ends next month, what happens then?
The extra $600 a week in unemployment benefits put in place to help Americans who lost their jobs during the coronavirus pandemic is set to expire at the end of July, but lawmakers are at odds over additional aid for the tens of millions of individuals who are still out of work.
Despite a better-than-expected May jobs report, which showed the unemployment rate actually dropped to 13.3 percent, both political parties appear to agree that another round of relief measures for workers and businesses is necessary. Still, they’re divided over specific policy measures, including whether or not to continue providing boosted jobless payments.
In the span of three months, more than 44 million Americans lost their jobs as a result of the coronavirus-induced economic shutdown. The speed and magnitude of job losses are without precedent, and are more than double what the U.S. saw during the global financial crisis a decade ago.
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Democrats want to continue the extra $600-a-week payment beyond July 31, when they officially end. In the $3 trillion package they passed in May, House Democrats proposed extending the $600 payments until at least the end of January. The bill also offered a so-called “soft cutoff,” which would give the extra money to individuals who needed it through March 2021.
“We must think big for the people now, because if we don't it will cost more in lives and livelihood later,” House Speaker Nancy Pelosi said in May.
But Republicans and the White House have argued that the sweetened benefits are actually disincentivizing some Americans from returning to their jobs, thus hindering the economy’s recovery from the virus-induced shutdown.
Larry Kudlow, a senior economic adviser to President Trump, has suggested the administration is open to a back-to-work bonus to encourage Americans who are receiving unemployment benefits to return to work if given the chance.
Under one proposal introduced by Texas Rep. Kevin Brady, the top Republican on the House Ways and Means Committee, recipients of unemployment benefits who go back to their jobs would be able to receive a one-time lump payment of $1,200, or two weekly payments of $600.
“We need these workers," Brady said in a statement. "Unless we can reconnect these workers with these Main Street businesses soon, that business may no longer be there. This proposal is an important part in preventing a prolonged recession.”
Another proposal from Sen. Rob Portman, R-Ohio, would provide $450 weekly to laid-off Americans returning to work, in addition to their wages. The money would last through July 31, the same date on which the extra $600-a-week unemployment benefit expires.
Roughly two-thirds of workers on unemployment are receiving more from the government aid than they did at their old job, according to a paper written by economists at the University of Chicago's Becker Friedman Institute. Once the $600-per-week expires at the end of July, the typical unemployment check -- which varies by state -- will return to below $400 per week.
They’re going to need possibly, probably, further support,” Federal Reserve Chairman Jerome Powell said during a press conference last week, when asked about the $600-a-week benefits. “It’s possible that we will need to do more, and it’s possible that Congress will need to do more.”
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Powell has warned there could be a "significant chunk" of Americans who remain on the unemployment payroll, even as the economy starts to recover from the outbreak of the virus and subsequent lockdown.
The U.S. central bank projected a lengthy recovery from the coronavirus recession. They said they expect unemployment to end 2020 at 9.3 percent and remain elevated for years, eventually falling to 5.5 percent in 2022. That's still well above the pre-crisis level of 3.5 percent.