There's a lot of debate right now over whether to grant Americans a second stimulus check to follow the first round of payments that went out starting in April. But that's not the only relief measure up for discussion. Since the CARES Act was passed in late March, out-of-work Americans have been entitled to a $600 weekly boost in unemployment benefits on top of their regular benefit amount. That boost, however, is set to expire at the end of July, and lawmakers are still at odds over whether an extension is needed.
Those opposed to extending boosted unemployment have argued that it's not necessary, what with the economy being in better shape today than it was just months ago. But here are a few reasons why jobless Americans continue to need that relief.
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1. The jobless rate is still high
In June, the unemployment rate was 11.1%. That's an improvement from both April and May, which saw 14.7% and 13.3% unemployment, respectively. But it's still very, very high. In February, U.S. unemployment was only at 3.5%. In March, it hit 4.4% as businesses started to close down and let staff go. Clearly, we have a long way to go to get back down to those levels, and until we're notably closer, it's clear that unemployment is still a widespread problem -- and that Americans need relief on top of their regular benefits, which normally replace just a fraction of their former earnings.
2. Businesses are exhausting their PPP loans
The widespread layoffs that led to April, May, and June's high level of jobless claims would have no doubt been exponentially higher had small businesses not gotten relief in the form of PPP loans. Those forgivable loans were designed to help businesses retain or rehire staff without having to worry about finding the money to pay employees. But PPP loans maxed out at two-and-a-half times a business's monthly payroll costs, and since many companies received that money in April or May, now's the time when those funds are starting to run out. And in the absence of follow-up funding, which is so far not on the table, smaller companies may not have the means to continue paying staff. As such, layoffs could increase as summer progresses.
3. We could face additional restrictions and lockdowns
In recent weeks, we've seen a frightening uptick in COVID-19 cases across the country. If the situation worsens or the current rate of transmission in these hotspots holds steady, we could see additional restrictions imposed that cause businesses to close and jobs to be lost. Even if we don't have a follow-up lockdown that mimics the one Americans were bound to earlier in the year, it's clear that many states are, at the very least, putting the brakes on reopening plans that otherwise could've resulted in job creation.
4. Americans might voluntarily retreat when the weather gets colder
Right now, the weather is warm, and people are anxious to get out and about. As we head into November and beyond, much of the country may start to embrace the natural lockdown that tends to ensue when the season changes. And this year, Americans are even more likely to hibernate when the threat of COVID-19, combined with flu and other seasonal ailments, comes to a head. At that point, consumer spending may decline, forcing businesses to lay off staff in the absence of steady revenue.
5. Americans don't have as much money to spend
While many businesses have remained, and will continue to remain, open throughout the pandemic, we can't gloss over the fact that countless Americans are either grappling with income loss or are dealing with income insecurity. As such, it's easy to foresee a scenario where consumer spending takes a dip on a whole in the coming months, even if COVID-19 cases stop surging. And less spending can easily lead to fewer jobs.
Lawmakers opposed to extending the $600 unemployment boost have argued that as long as it's in play, Americans will not be motivated to go back to work. But a lot of people who remain unemployed aren't turning down jobs; they're not getting offers, or haven't yet been called back in by their former employers. Unfortunately, there's a good chance our current recession will last into 2021, and cutting off any amount of relief at a time like this could be catastrophic for the millions who are currently, or will be, without work.
