What will replace ‘coronavirus’ unemployment: three bailout plan

An additional 600 dollars that Americans receive in the form of weekly unemployment benefits end next month — MarketWatch offers an opportunity to learn what lawmakers want to replace this money.

Чем заменят 'коронавирусное' пособие по безработице: три плана финпомощи

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The Americans dismissed from work because of a pandemic of mers received an additional $ 600 per week unemployment benefits beyond what they get from your state. The money was part of a package of stimulus measures amounting to 2.2 trillion dollars, known as the Law CARES.

But next month, if lawmakers did not change, the supplementary benefit will cease.

Additional $ 600 be controversial, especially given the fact that 2/3 of the dismissed receive more money from unemployment benefits than from their work. But at the same time, supporters of the payments say that the reduction in allowances could cost the country even more jobs.

Since the legislature is considering a new round of incentive funding at stake are three suggestions about what to replace the extra $ 600. Two of them would allow unemployed Americans to obtain additional funds in addition to benefits state unemployment. The third is the opposite — a bonus for returning to work.

The extension of additional assistance until January 2021

Last month the Democrats of the house of representatives adopted the Law HEROES in the amount of $ 3 trillion, which, among other things, to extend additional unemployment benefits to $ 600 until January 2021.

According to the congressional Budget office, if the benefit will be extended until January 2021, 5 out of every 6 recipients will get more money than if they work during these six months.

Some argue that these generous benefits will not motivate people to find a new job. But the increase in unemployment will mean that Americans will have more money to spend in shops, and this ultimately can lead to lower unemployment, says Heidi Shierholz, an economist at the economic policy Institute in Washington.

“It is not true that there are many jobs that people could fill if it had not received unemployment benefits,” said she.

According to a study published in 2008, mark Zandi, chief economist of Moody’s Analytics in the United States, every dollar spent on unemployment benefits, leads to an increase of GDP by 1.64. Every dollar spent on infrastructure projects, increases U.S. GDP 1.59 times.

The majority leader in the Senate Mitch McConnell said that the law HEROS “is like the speaker of the house glued random ideas from the most liberal members of and added the word “coronavirus”. He also called it a “wish list of the Democrats”.

But house of representatives speaker Nancy Pelosi said last week that the Republican Senate will “catch the spark” and that their “tone changes”.

 

Binding of the scale of benefits the level of unemployment in the state

Unlike the HEROES act, a democratic proposal that has bicameral support requires additional unemployment benefits that are tied to levels of unemployment in the state.

This proposal, known as the Law on assistance and safety of workers, will allow Americans to continue to receive additional allowance of $ 600 during the whole period of emergency due COVID-19. Once a state of emergency in the country or state will be terminated, unemployed Americans will receive benefits depending on the unemployment rate in their state. The initiator of the bill is the U.S. representative don Beyer, Democrat from Virginia.

For example, in States where the overall unemployment rate below 7.5%, unemployed Americans will be eligible to receive $ 350 in the form of weekly benefits in addition to benefits of the state. After 13 weeks, if they’re still unemployed, they will receive an additional $ 200 a week.

This plan is the most logical one, said Michelle Evermore, senior policy analyst in the National draft law on employment, the organization dedicated to protecting the rights of workers.

“Unemployment benefits should always be tied to economic conditions, she said. — When in March a Law was passed for patient care, the economic consequences of a pandemic coronavirus looked so that he will continue to this day and it will be as bad as it is now. Therefore, at that time it seemed reasonable to provide an additional $ 600 before July. But despite the fact that 2.5 million people have returned to work last month, more than 21 million Americans remain unemployed. This is a sign that more support is needed”.

Former chairmen of the Federal reserve system Ben Bernanke and Janet Yellen also supported the proposal of Beyer.

“This approach provides a rapid and automatic assistance as needed, without the need for congressional action, and also stops providing the additional help as conditions improve, Bernanke said. — This approach is not only timely will help the unemployed, but also will help to stabilize the overall economy by increasing purchasing power in times of high unemployment”.

“We need to support the economic recovery, said Yellen. — Law on assistance and safety of workers is important because it ensures that the critical unemployment benefits in accordance with the Law CARES will remain in force as long as they need it.”

Bonus for return to work

The last unemployment report was surprisingly positive and showed that 2.5 million Americans back to work — a sign that there are new jobs as the opening of businesses in the United States. According to Senator Rob Portman, Republican from Ohio, extending weekly benefits in the amount of $ 600 longer Jul will not motivate people to return to work if they will get more in the form of unemployment benefits.

He offers a bonus for returning to work, which will give additional returning $ 450 per week.

“Not only that, a bonus offer about the return to work is the correct policy from the standpoint of motivating people to safe return to work and resumption of work of the enterprises, it can also benefit American taxpayers due to the significant costs savings compared to the current money that we spend on unemployment benefits,” said Portman.

“It’s very important to have a workforce ready to jump to the old or new jobs now that the economy is safely opens up,” he said previously.

The Director of the National economic Council Larry Kudlow said that the administration trump “very carefully” considering a proposal by Portman, which he will present in full this week.

Beyer said the proposal “essentially misunderstands the root cause of unemployment: a deadly pandemic, and is unable to foresee the impending crisis of demand, which will energize the new job cuts”.

Bonus for return to work may ultimately encourage people to take the “wrong choice of work,” says Evermore.

“People will jump at the first job they’re offered, she said. — This may mean that you have to settle for less pay or hard work.”

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