The Associated Press reported that despite some promising indicators in the latest jobs report from the Labor Department, analysts have expressed concern due to several negative indicators as well as the current “second wave” of coronavirus cases. Moreover, some have analyzed the recovery and suggested its slowed pace means a full recovery wouldn’t be complete until 2022.
Added to that is the ongoing negotiations over a second stimulus package, and in particular, one of the elements which Democrats and Republicans have yet to see eye-to-eye on: the amount in unemployment supplements that should be offered in the next package.
Democrats Want More in Unemployment Aid, While Republicans Have Negotiated for Lower Supplements
U.S. unemployment dropped to 6.9% in October, and the country added a solid 638,000 jobs. That's still far fewer than needed to regain most of the jobs lost to the pandemic recession — just as new viral cases are setting record highs. https://t.co/DCPAdEauHB
— The Associated Press (@AP) November 6, 2020
In the $2.2 million Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in late March, people received $600 extra in unemployment for several weeks.
Donald Trump’s Lost Wages Assistance program, which he funded through the Federal Emergency Management Agency (FEMA), provided $300-$400 in supplemental payments after people exhausted the CARES Act funds. However, that program only provided money for a maximum of six weeks.
According to CNET, Republicans and Democrats have been disagreeing over the amount of supplemental unemployment to provide in the next bill.
Democrats have proposed a $2.2 million HEROES Act, while the White House has proposed a $1.8 million stimulus bill. In their respective bills, the Democrats have sought to keep unemployment supplements at the same level of $600, CNET reported. Republicans in the Senate and at the White House have suggested amounts ranging from $300-$400, The Washington Post reported.
Republicans have said they are concerned offering higher amounts in unemployment could “disincentivize” workers from returning back to work if they can make more money on unemployment than by working. “We should never pay people not to work,” Texas Senator John Cornyn said, according to CNBC. “We should try to help people get back to work.”
However, economists have pointed out that higher amounts prompt more spending, improving the overall health of the economy. “Cutting off the $600 cannot incentivize people to get jobs that aren’t there,” a former Labor Department chief economist, Heidi Shierholz, told CNBC.
Depending on the compromise that is produced, the amount will be between $300-$600.
Unemployment, a Key Economic Indicator, Shows Recovery Moving at a Glacial Speed
More than 13 million people could lose their unemployment benefits at the end of December https://t.co/ssUYUAtrtd
— CNBC Make It (@CNBCMakeIt) November 6, 2020
Friday’s Labor Department report revealed a mix of good and bad news.
A positive development was that the country’s unemployment rate dropped to 6.9%, according to NPR. In September that number had been 7.9% and at its height, the unemployment rate was 14.7% in April. Another positive development, reported by Reuters, was that 638,000 non-farm jobs were added in October.
Some of the negative indicators were that 3.6 million Americans have been out of work for more than six months and job creation continued to remain low, according to Reuters. For example, NPR reported that the economy has only recovered “54% of the 22 million jobs that were lost during the spring.” Another negative indicator Reuters reported was that the percentage of Americans who considered themselves permanently unemployed increased from September’s rate of 35.6% to 40.9% in October.
For many, unemployment benefits have been maxed out and ended. Nicolas Leninger told NBC News that he lost his job in April and lost his benefits in early October. “I tried to reapply for unemployment, but they sent me something in the mail saying I’d received the maximum amount,” he said.
Experts have said that the lack of a new stimulus package with more economic payments and unemployment supplements for struggling households has hampered the economy’s recovery. Sung Won Sohn, an economics professor at Los Angeles’ Loyola Marymount University, told Reuters, “Initially, the recovery was breathtaking, but has lost much steam. With no fiscal stimulus and the resurgence of coronavirus, job gains will be tougher to achieve in the future.”
Other experts agreed.
With coronaviruses cases on the rise, international economist James Knightley said the lack of a compromise in Washington is likely to put more pressure on the Federal Reserve. “The Federal Reserve is going to end up doing more stimulus rather than scaling it back,” he said. “This is especially so if political tensions remain high and get in the way of a swift fiscal response.”
A chief economist at PNC Financial, Gus Faucher, told Reuters that a recovery would take 16 months at the pace set in October.