The $600 weekly enhancement to unemployment benefits will probably stop after July 31. Still, there is a proposal from the Democrats that would reduce the benefit gradually (instead of in one fell swoop) as the unemployment rate falls. Another idea, this one from the Republicans, would pay Americans a bonus to return to work.
The $600 benefits have stirred up controversy
The coronavirus pandemic has pushed unemployment figures to the highest levels since the Great Depression of the 1930s. Close to 41 million Americans have filed for unemployment since mid-March. The CARES Act, the $2.2 trillion coronavirus relief law, was enacted in late March and expanded unemployment benefits.
Unemployment benefits, which are typically administered by the states, replace around 40% of lost wages on average. Funded by the federal government, the CARES Act added another $600 a week to state payouts. The idea was to replace wages for a typical worker.
That benefit has become controversial and is polarizing legislators. Those on the right see the money as a disincentive to go back to work. On the other hand, those on the left view the payments as a lifeline and want to extend them into 2021. That extension seems unlikely.
Unemployment aid could be tied to economic conditions automatically
One policy approach would link the amount and duration of unemployment aid to economic conditions.
One Democratic proposal is the Worker Relief and Security Act. The act reduces aid as the public health crisis recedes, and state unemployment rates improve. Unemployed individuals would continue to receive $600 a week during a national or state emergency tied to Covid-19, and that amount would gradually fall as the official health emergency recedes.
For instance, an unemployed worker would receive an extra $450 a week in states with an unemployment rate above 7.5%. They would get that for 13 weeks. After that, workers would get $300 a week if the unemployment situation did not change.
States with unemployment rates below 7.5% would pay people $350 a week for 13 weeks, then $200 a week until the rate fell below 5.5%.
The employment bonus
Republican lawmakers are promoting the idea of an employment “bonus” to encourage Americans to find a new job. One such proposal would pay unemployed people who return to work an extra $450 a week. This wage subsidy hopes to eliminate the financial incentive that many workers currently see in collecting unemployment benefits.
Another idea from the right would pay benefits in a lump sum instead of weekly checks. For example, instead of paying out an additional ten weeks of the $600 benefit, lawmakers propose paying $6,000 upfront.
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