Experts Agree Extending the $600/week Unemployment Benefits is Bad for America’s Economic Recovery

Organizations from both sides of the aisle say the enhanced federal unemployment benefits disincentivize work.
July 22, 2020 — Blog    — Coronavirus Bulletin    — In Case You Missed It...   

Democrats continue to call for the $600 weekly unemployment benefits that were in created as part of the CARES Act to be extended.

While Republicans agree that we must help workers through the recovery, extending these unemployment benefits will discourage work, shutter businesses, and prolong a recession.

Experts from both sides of the aisle agree. Here is what people are saying about Democrats’ plan to extend these benefits.

Extended Unemployment Payments = “Lower Economic Output and Employment”

  • Congressional Budget Office: Extending higher unemployment insurance payments would mean roughly five of every six recipients would receive benefits that exceeded the weekly amounts they could expect to earn from work during those six months, and would lower economic output and employment in 2021.

Extending Payments “Inhibits an Economic Rebound”

  • Bipartisan Policy Center: The $600/week should be phased down to $400 for two months and then re-evaluated. “As local officials begin to relax stay-at-home orders, however, evidence is increasing that the additional $600 in weekly benefits serves as a disincentive for some people to return to work and inhibits an economic rebound as business activity picks back up.”

One-fifth of Recipients Making Double What They Used to Earn — As Long As They Don’t Work

  • University of Chicago researchers: “…68% of unemployed workers who are eligible for UI will receive benefits which exceed lost earnings. The median replacement rate is 134%, and one out of five eligible unemployed workers will receive benefits at least twice as large as their lost earnings. Thus, the CARES Act actually provides income expansion rather than replacement for most unemployed workers more than two-thirds of UI recipients may receive benefits that exceed lost earnings, with more than 20 percent potentially getting double what they used to earn – as long as they don’t work.”

Dem Governor Notes Payments “Discourage Work”

Unemployment Pays More

Obama Economic Advisers: Extension doesn’t make sense now

1 Out of 5 Small Biz Owners Can’t Hire Because of Unemployment Insurance

  • National Federation of Independent Business Research Center survey:18% of small business owners have had an employee decline a job offer because they wanted to stay on unemployment insurance. Another 6% of small business owners have increased salaries to encourage a worker to come back to their job. NFIB member Les Neilly testified before the Senate Finance Committee about the challenges the increased federal pandemic unemployment compensation created for his employees and his business. NFIB recommends prohibiting unemployment insurance compensation from exceeding an employee’s prior wages.

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