Additional unemployment benefits in the amount of $ 600 per week will cease to pay at the end of July. Democrats want to extend the payments in the next year, but Republicans seem determined to block such an extension. But lawmakers on both sides of the political spectrum have expressed other ideas such as linking aid to the level of unemployment or the payment of a “bonus” to those who find work, writes CNBC.
As a result of the pandemic coronavirus unemployment rose to levels not seen since the great depression: from mid-March, almost 41 million Americans filed applications for unemployment benefits.
In normal times, unemployment benefits, who are appointed by the States, replacing about 40% of the previous wage of the average worker. The law CARES, adopted at the end of March and is calculated on the total amount of 2.2 trillion dollars in aid in connection with the coronavirus, he added $ 600 to the Federal payments to the amount paid by the state to fully replace the wages of the typical worker. This policy, which should be completed July 31, turned out to be controversial.
Human rights activists consider an additional pay obstacle to returning to work. The majority leader in the Senate Mitch McConnell recently stated that any further legislation on financial assistance will not increase payments.
But Democrats consider the $ 600 as a lifeline for many Americans. The house of representatives, led by Democrats in may adopted a bill under which a benefit will be extended until 2021. However, experts hardly believe that given the disagreement, the extension payments of $ 600 is unlikely. However, according to them, most likely, will be paid for some extraordinary benefit, given that unemployment will probably remain high for the foreseeable future and to find a job will be difficult.
The congressional budget office predicts the unemployment rate in the United States in the fourth quarter of this year in the amount of 11.7%. It may be lower than April’s figure of 14.7%, but still higher than any figure since the great depression.
One policy approach would link the amount and duration of unemployment assistance economic conditions. Such an example can be the proposal of the Democrats, the law on the protection and safety worker. It implies the reduction of the aid as the crisis in health care will recede, and unemployment to decline. Persons without work, will continue to receive $ 600 a week during the emergency in the country or state associated with Covid-19.
For example, the unemployed will receive an additional $ 450 a week in States with unemployment above 7.5%. This assistance will be paid for up to 13 weeks. After that, they will get 300 dollars a week, if the unemployment situation does not change.
States with an unemployment rate below 7.5% will pay $ 350 per week for 13 weeks and then $ 200 a week until the unemployment rate falls below 5.5%.
Bonus for found work
Some lawmakers used the idea of a “bonus” for employment, to encourage Americans to find a new job. Senator Rob Portman offers to pay people who return to work, an additional $ 450 a week. The subsidy is designed to eliminate any financial incentives that workers currently may have, receiving high unemployment benefits.
However, this bonus ends July 31 — the same day on which the scheduled termination benefit payment in the amount of $ 600 per week.
According to Ernie Tedeschi, economist Evercore ISI, I have an idea and the Republicans — to pay benefits in a lump sum, instead of weekly checks. For example, instead of having to pay an additional 10 weeks of benefits in the amount of $ 600, the legislators would be paid $ 6,000 in advance.
According to Tedeschi, in the absence of $ 600 a week people will receive a much smaller weekly unemployment checks from the state that will encourage them to look for work, but they will have enough money to cope with the situation.
Possible obstacles have with each approach. According to Tedeschi, the binding benefits to such conditions, as the unemployment rate has the meaning given the uncertainty of the duration of the pandemic and its economic damage. But conservatives may not like this approach: the unemployment rate in the state is unlikely to decrease if unemployment assistance is reduced, he said.
“Bonus” approach has its problems, namely that it establishes an end date of financial assistance, which may not coincide with improving economy, experts say.
According to Tedeschi, the Portman proposal assumes that as at 31 July for people who are readily available jobs, which seems unlikely, considering the ongoing measures for social distancing, and probability of closing of many enterprises.
“Bonus” approaches can also force the Americans to accept the first available job, which may hinder long-term recovery of the economy if the skills and interests of the people will not be appropriate for the job.
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