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Reinstating $600 weekly COVID-related unemployment benefit would be bad for economy, report says

'...the average low-wage worker collected nearly twice as much in benefits'

OLIVIER DOULIERY/AFP via Getty Images

Democrats and Republicans have been fighting for months over another coronavirus-related economic stimulus package, unable to find agreement on how big the second package should be. The result, of course, is that millions of Americans who need additional economic aid may never receive it.

But according to a new study, one benefit included in the first bill — the $600 per week enhanced unemployment benefit — could drastically impact the American economy if lawmakers reinstate the benefit.

What are the details?

The nonpartisan, not-for-profit Foundation for Government Accountability has a forthcoming report outlining the negative consequences of the enhanced unemployment benefit.

The biggest problem with the weekly payments is that they disincentivize working because the millions of Americans who work in low-earning industries make more with the enhanced unemployment benefit, along with any state benefits, than from their job, according to the FGA.

The federal benefit would essentially increase government dependence and make it more difficult for industries critical to the American economy to hire reliable workers.

"[A] whopping 76% of unemployed workers were receiving more in unemployment benefits than they earned while working. Indeed, the average low-wage worker collected nearly twice as much in benefits to stay home as they could earn returning to work," the report says, according to the Washington Examiner.

The overall result would mean less employed Americans.

The nonpartisan Congressional Budget Office even studied the impacts of extending the benefit, finding the benefit would decrease economic productivity and increase unemployment.

In summary, the CBO's report found:

  • "The nation's economic output would probably be greater in the second half of 2020 than it would be without the extension of the increase; in calendar year 2021, however, output would be lower than it would be without the extension."
  • "Employment would probably be lower in the second half of 2020 than it would be if the increase in unemployment benefits was not extended; in calendar year 2021, employment would be lower than it would be without the extension."

Will the benefit be reinstated?

As lawmakers attempt to hash out another economic stimulus, Democrats have been committed to extending the enhanced unemployment benefit, which expired at the end of July.

Last week, Democrats unveiled a slimmed down version of a bill they passed in May; the new bill would extend the enhanced benefit through January, and perhaps even retroactively distribute the benefit to those who have remained unemployed since the benefit first expired.

Still, it remains unclear whether another stimulus package will ever become reality.

President Donald Trump said Tuesday that he will not negotiate on another bill until after the election, but later said he is prepared to sign a bill that gives Americans another $1,200 stimulus payment. Later Tuesday evening, Trump was again encouraging Republicans to negotiate a stimulus deal.

One last thing…
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