Millions of Americans are unemployed from the COVID-19 crisis, and while May's jobless rate did come in a bit lower than April's, a deeper dive into that data reveals that unemployment levels may have actually held steady or even climbed despite a gradual reopening of the economy. In fact, it's these very points that are driving lawmakers to oppose the extension of boosted unemployment benefits past their original July 31 expiration date.
When unemployment claims piled up overnight back in March, lawmakers reacted fairly quickly via the CARES Act, which was passed later that month. Among other provisions, the CARES Act allowed for a $600 weekly federal boost to unemployment benefits that has been instrumental in keeping laid-off workers afloat these past few months.
To be clear, workers on unemployment have, for the past number of months, been entitled to $600 a week on top of the benefit they otherwise would've qualified for. In other words, a worker who would normally get $400 a week in unemployment has instead been collecting $1,000.
Many workers, in fact, have gotten a raise on unemployment -- a fact that's pushed lawmakers to argue against extending that $600 weekly boost, which, under the CARES Act, runs out in just about a month. But while failing to extend that provision will no doubt hurt the millions of Americans who are still jobless, it could also have another harmful impact: prolonging our current recession and hurting our chances for a relatively quick recovery.
It's not just unemployed workers who need that boost extended
Clearly, those who are currently relying on that extra $600 in weekly unemployment income are the ones who stand to struggle the most financially if that provision isn't extended past July. But let's think about the additional repercussions of cutting off that income stream. If countless workers are pushed into virtual poverty in the absence of that additional income, they won't have money to spend as the economy begins to reopen. That means those same people will start cutting back on spending, stop frequenting local businesses, and potentially fall behind on payments, like rent, that put other individuals, like their landlords, in a precarious financial position.
In other words, cutting off that $600 a week will hurt all of us; not just the people who stop collecting it. In fact, not extending that boost could be the death knell of small businesses that were closed during the lockdown that was enforced earlier in the year and are now relying on customers to help them keep the doors open.
In fact, at a time when talks of a second stimulus payment are occupying much of the news, let's not forget that helping laid-off workers stay afloat is equally important. Lawmakers have argued that as the economy reopens, more jobs will be added, and the need for boosted unemployment benefits will cease to exist. Others argue that the extra $600 a week actually disincentivizes out-of-work Americans to return to a job, since many people are earning more money on unemployment. That may very well be true, but let's not forget that we need those people to keep spending money to keep the economy going, and if that additional income is ripped away, the results could be downright catastrophic. Specifically, even more jobs could go away when businesses start to grapple with lost revenue, leading to a devastating cycle.
Despite a recent surge in COVID-19 cases, the economy may continue to slowly but surely reopen. But if we want our recovery to happen sooner rather than later, lawmakers need to step in and make sure that those who are out of work are taken care of.