Millions of jobless Americans relied on the $600 extra unemployment checks designed to help people out during the COVID-19 pandemic. However, with the extra benefits set to expire, will they be extended?
The bottom line is that the Republican-controlled Senate has not yet made that decision. The notion of extended unemployment benefits is something that will be negotiated and perhaps included in the second stimulus package, which Republicans plan to take up the third week of July 2020.
Top GOP officials have indicated, however, that any extended checks would likely be smaller than the $600 because some Republicans believe the $600 provided too much of an incentive to people not to work. There’s also a possibility that the checks could take a different form, say as return-to-work bonuses. At the same time, top Republicans, including President Donald Trump, have indicated some measure of extended benefits might be possible, albeit possibly a smaller amount.
First of all, here are the deadlines. Technically, the extra benefit (which comes on top of unemployment people receive from states) expires on July 31, but because of the way states process payments, they’re likely to stop going out July 25 for all states but New York, which has a July 26 expiration date, according to CNBC.
Here’s what you need to know:
Administration Officials Have Warmed Up to the Idea of Extended Benefits, But the Amount Could Be Lower
According to The Los Angeles Times, Treasury Secretary Steven T. Mnuchin and Trump administration economic advisor Larry Kudlow have recently indicated that there might be some extension of the benefits. The Times reported that one possible compromise is approving extended benefits but lowering them to $200-$400 instead of $600 per week. The lower amounts could be wedded to another stimulus check to Americans, perhaps of $1,200, although whether there will be a second round of stimulus checks also remains to be seen.
According to The Washington Post, top Trump administration officials have telegraphed recently that they’re open to an extension, but not $600. They include Trump, through a spokesperson, and Kudlow.
Some Republicans believe the $600 extra weekly benefit provides too much of an incentive not to work. According to the Post, Mnuchin said on television that the administration wants to make sure extended benefits wouldn’t exceed 100% of the worker’s past wages.
Even if Congress authorizes extended benefits, there could be a gap between the expiration date and benefits kicking in again.
“What’s going to happen is on [July] 25, states will stop paying the $600 and will have to turn that function off in their computer system,” Michele Evermore, senior policy analyst at the National Employment Law Project, told CNBC.
“To get it started back up again, it may take a while to reprogram. I’ve been told that even in states with modernized systems, it could still take weeks.”
Republicans are watching unemployment numbers carefully. According to Forbes, the unemployment numbers released July 16 showed only a small decline from the 1.31 million filed the week before. That’s good news for those hoping for another round of extended unemployment benefits.
Two former Federal Reserve Chairs have advocated for extended benefits. “I think, frankly, it would be a catastrophe not to extend unemployment insurance,” Janet Yellen told NBC News. Ben Bernanke joined in the call for an extension of the benefits, according to The Hill.
However, according to ClickonDetroit, Senate Majority Leader Mitch McConnell said any extended plan won’t likely pass before the first extension expires.
There Remains Some Republican Opposition to Extended Benefits
Some Republicans remain opposed to the idea of extended benefits. “You’re trying to take care of people unemployed; I’m trying to get them back to work,” said Rep. Blaine Luetkemeyer (R-Mo.) to The Hill.
According to Time Magazine, some Republicans prefer a “return to work bonus” instead of extended unemployment benefits. Kudlow is one of those, according to Time.
Mnuchin has indicated he prefers if any extended benefits don’t exceed 100% of a person’s past wages, The Post reported.
“The Coronavirus Aid, Relief, and Economic Security Act (CARES) Act substantially expanded Unemployment Insurance (UI) in order to help workers losing jobs as a result of the Covid-19 pandemic. One provision of the act creates an additional $600 weekly benefit known as the Federal Pandemic Unemployment Compensation. The size of the payment—$600—is designed to replace 100 percent of the mean U.S. wage when combined with mean state UI benefits,” a working paper from researchers with the University of Chicago explained in May.
Research from the University of Chicago gave some ammunition to people who oppose the $600 weekly benefit’s extension.
The University of Chicago article found that:
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. We also show that there is sizable variation in the effects of the CARES Act across occupations and across states, with important distributional consequences. For example, the median retail worker who is laid-o can collect 142% of their prior wage in UI, while grocery workers are not receiving any automatic pay increases. Janitors working at businesses that remain open do not necessarily receive any hazard pay, while unemployed janitors who worked at businesses that shut down can collect 158% of their prior wages.
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