Should Enhanced Unemployment Benefits Continue Beyond July?

Senate committee hears testimony on the potential impact of extending $600 boost

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U.S. Senate lectern

While workplaces around the country begin to reopen, lawmakers are debating whether to extend enhanced unemployment benefits that were created in response to the pandemic.

"Our economy has turned the corner against the coronavirus," said Secretary of Labor Eugene Scalia at a Senate Finance Committee hearing June 9. He called the U.S. Department of Labor's most recent jobs report "encouraging," and noted that 2.5 million jobs were created in May, even though experts had predicted that more than 7.5 million jobs could have been lost.

"But we're also mindful that millions of Americans remain out of work," Scalia said.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed to help boost the economy during the pandemic and provide financial assistance to the millions of struggling workers who lost their jobs due to the crisis. Among other provisions, the act provides an additional $600 a week in unemployment benefits through the end of July.

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Debate

Congressional members disagree on whether the $600 weekly federal benefit should be extended through Jan. 31, 2021. "As we begin to safely reopen our economy, it should be the goal of Congress to get America back to work while helping those who can't in a more targeted and efficient way," said Sen. Chuck Grassley, R‑Iowa.

He pointed to a Congressional Budget Office (CBO) analysis finding that an extension of enhanced benefits would result in more unemployment and lower economic productivity in 2021. The CBO said if enhanced unemployment benefits continued through January 2021, about five recipients out of six would receive benefits that exceed the weekly pay they could expect to earn from working.

The CBO report also said that the $600 additional weekly benefit has been critical for sustaining consumer demand. In support of extending the benefit, Sen. Ron Wyden, D‑Ore., said, "Even if millions of Americans go back to work, if millions of Americans who remain unemployed are suddenly unable to pay their bills, the economy will get worse, not better."

According to the CBO, the "estimated effects on output and employment are the net results of two opposing factors." The government watchdog said extending the additional benefits "would boost the overall demand for goods and services, which would tend to increase output and employment," but the extension "would also weaken incentives to work as people compared the benefits available during unemployment to their potential earnings."

Future Economic Relief 

The $2 trillion CARES Act significantly expanded unemployment-insurance benefits for U.S. workers impacted by the coronavirus outbreak. In addition to increasing the amount of weekly unemployment assistance workers receive, the legislation extended how long people can receive benefits and expanded eligibility to nontraditional workers, such as independent contractors, gig workers and the self-employed.

The enhanced unemployment assistance was approved as millions of workers filed new jobless claims and struggling businesses continued to furlough or lay off employees.

"The $600 benefit was an extraordinary measure to help Americans who were shut out of the workplace in a closing economy," Scalia testified at the Senate committee hearing. "As the economy reopens, I appreciate that members of this committee do not want the CARES benefits to be a deterrent to resuming work."

He said providing the enhanced benefit was "the right thing to do," but the best thing for workers is ultimately work, not unemployment. "Going forward, I think the single best thing for bringing workers back to work will be taking the necessary steps to ensure the economy revives."

Florida state Sen. José Javier Rodríguez, D-Miami, supports extending enhanced benefits. The CARES Act has done "a great deal of good," he testified. The additional $600 benefit "goes right to out-of-work Americans who spend it in their communities on necessities," he said, adding that federal CARES Act programs "ought to remain in place until recovery has reached all sectors."

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