by Maurie Backman | Updated July 25, 2021 - First published on Jan. 13, 2021
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New data could make the case for enhanced unemployment benefits.
After months of negotiations, lawmakers finally passed a $900 billion stimulus bill in late December that included rental assistance, PPP loan funding for small businesses, direct stimulus checks worth $600 apiece, and boosted unemployment benefits. Jobless workers are now entitled to an extra $300 a week in unemployment through the middle of March.
But some lawmakers believe the last round of aid wasn't enough. In fact, President-elect Joe Biden is working on a third relief bill that includes $2,000 stimulus checks for the public, as well as expanded unemployment benefits. We may even see a $600 weekly unemployment boost, which is what the CARES Act allowed for from late March of 2020 through the end of July of 2020. (Recently, Democratic Senator Ron Wyden called for a $600 weekly unemployment boost, and other lawmakers have floated the idea as well.)
In the past, Republican lawmakers opposed a $600 weekly unemployment boost, citing fears that the jobless wouldn't be motivated to find work with that sort of extra money in play. Many jobless folks who received a $600 weekly boost under the CARES Act wound up making more money via unemployment than they did at their former jobs, so some lawmakers weren't keen to keep that system in place. But new data reveals that most unemployed Americans did continue to look for work even while getting the $600 weekly boost. And that could fuel the argument to reinstitute that boost.
Researchers from Yale University found that a $600 weekly unemployment boost didn't stop Americans from looking for work over the spring and summer, while that extra money was in play. And that's in spite of the fact that 76% of people were eligible for more money from employment than what their previous paychecks paid them, according to the University of Chicago.
It's important to remember that holding down a job doesn't just mean collecting a paycheck. For many, it means retaining heavily or fully subsidized health insurance -- an expense jobless workers are forced to bear on their own. For a family with multiple dependents, returning to work for a lower paycheck than what unemployment pays could make financial sense when you factor in the cost of insurance. And while going without health coverage is never a good idea, during a pandemic, it's a downright dangerous notion.
Let's also not forget that too extensive a resume gap can constitute a big setback for some workers. That alone might motivate the jobless to keep searching for work, even if unemployment benefits are covering their entire missing paycheck and then some.
Furthermore, if a $600 weekly boost to unemployment benefits is implemented, it won't last forever. And that, too, should motivate jobless people to search for work even when they're getting enough money to cover their bills. This holds true for both salaried workers and gig workers (who Wyden agrees should also benefit from expanded unemployment relief). Additionally, while self-employed gig workers may not be motivated by employer-subsidized health insurance, they're apt to want to retain existing clients for fear of losing them long-term.
It's too soon to know whether a $600 weekly unemployment boost will come back into play, but what we do know is that many U.S. households are struggling immensely in the absence of their regular paychecks. Many have depleted their savings in an effort to stay afloat, and if they don't get more aid soon, the consequences could be devastating. While there's a good chance the U.S. economy will start to dig out of its hole as coronavirus vaccines are rolled out, we can't count on that happening for months, and extra aid for the jobless could be what gets many families through this difficult period.
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