Millions of Americans have lost their jobs in the wake of COVID-19, and while the jobless rate declined in June, we're still nowhere close to reaching pre-pandemic unemployment levels. Thankfully, the CARES Act, passed in late March, allowed for a $600 weekly boost to unemployment benefits -- a boost that has, so far, enabled many jobless workers to replace their entire lost paycheck. But that boost is set to expire in days, and without an additional relief package calling for expanded unemployment, many workers are apt to struggle as the country grapples with a recession.
In May, Democratic lawmakers proposed retaining that $600 boost through January 2021, but Republicans almost instantly pushed back. Many have cited declining unemployment and a reopened economy as reasons not to extend that boost. Also, those opposed to leaving that boost in place fear that it acts as a deterrent for jobless Americans to return to work.
But now, Republican lawmakers are singing a different tune. Treasury Secretary Steven Mnuchin recently stated that Republicans are working on a COVID-19 relief package that includes enhanced unemployment benefits that would ultimately replace 70% of workers' lost wages. That's a clear improvement over traditional unemployment benefits, which often don't even replace so much as half of workers' absent paychecks.
At the same time, though, replacing 70% of lost wages is not as helpful as replacing 100% of lost wages, which the CARES Act did for many people. And if unemployed workers see their incomes decline once the $600 weekly boost expires at the end of July, it could have a severe impact on our overall economic recovery.
Any boost is better than no boost
To be clear, boosting unemployment to the point where it replaces 70% of lost wages is a more reasonable solution than not boosting those benefits at all. At a time like this, denying jobless workers a boost on top of their regular benefits would not only mean driving countless Americans into dire financial circumstances, it would also mean wrecking any hope we might have for a relatively quick economic recovery. Still, 70% wage replacement is not the same thing as 100%, so if the plan Mnuchin refers to is passed, jobless workers could still be left reeling.
Meanwhile, the Republican relief plan is also seeking to allocate money to help schools reopen, provide additional funds to the Paycheck Protection Program so that businesses that received an initial loan can collect a second one, and create tax credits that reward companies for hiring staff. Just as notably, the plan does call for direct stimulus payments, similar to the $1,200 payments that went out under the CARES Act. But at this time, a specific payment amount has not been determined.
The $600 weekly boost to unemployment officially runs out on July 31, but because of the way states generally pay unemployment benefits, it will mostly expire this Saturday or Sunday. Even if the aforementioned Republican proposal is passed, it could take a number of weeks for jobless Americans to get that extra money in their benefits, and that alone is a very troubling thought.