As federal lawmakers debate another aid package for the coronavirus pandemic that has left about 35 million Americans unemployed, new study shows how generous (or not) generous unemployment benefits were the initial stimulus bill. which addresses the crisis.
Two-thirds (68%) of the unemployed would go home more According to researchers at the University of Chicago, state unemployment insurance money and a weekly supplement of $ 600 from the federal government they would have at work.
In fact, one in five eligible workers would receive benefits that would at least double their lost earnings, the researchers added, stressing that they were not taking a position on whether the benefits were too little or too much.
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The average profit replacement rate was 134% of lost wages, they estimated. Across the states, the median earnings replacement rate has exceeded lost wages, ranging from 129% in Maryland to 177% in New Mexico.
The additional weekly benefit of $ 600 was part of the $ 2.2 trillion CARES law, which also included $ 1,200 in direct checks to most Americans and potentially repayable business loans. Additional unemployment benefits expire at the end of July.
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According to the chairman of the Federal Reserve, Jerome Powell, about 40% of all jobs that earned less than $ 40,000 a year in February were lost in March.
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The Chicago study, distributed by the National Bureau of Economic Research this week, said the benefit was a “substantial increase in income” for low-income workers, but noted that many workers may also have lost their health insurance when they lost their wages.
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Lawmakers adopted the Economic Aid, Relief and Security Act (Coresavirus) in late March to quickly inject money into the economy as the country recovers from the epidemic and its rapid tax consequences.
According to the chairman of the Federal Reserve, Jerome Powell, about 40% of all jobs that earned less than $ 40,000 a year in February were lost in March. The country’s unemployment rate reached 14.7% in April, while 20.5 million jobs were lost in that month alone, according to the Bureau of Labor Statistics.
However, the flat rate could have uneven effects because the system “essentially pays bonuses to some redundant workers (which could lead to beneficial increases in social distancing) but does not provide for additional payment for similar front-line workers” .
For example, a janitor in a still open business might not receive risk payment, but an unemployed janitor could receive 158% of his previous salary, according to the study. (The researchers analyzed the U.S. census data on wages and added the numbers to unemployment benefit calculator
They built. They said they compared their own estimates of the statewide average benefits of potential unemployed applicants with the average benefits of real applicants, as reported by the Department of Labor.)
In 2018, median household income was $ 63,179, according to census figures.
The CARES law authorized additional payments, but observers say that, between bureaucracy and the flow of claims, the money may not reach the pockets of all eligible workers. Only According to the Left-wing Economic Policy Institute, 37 out of 100 eligible workers did so successfully through the unemployment application process.
The researchers pointed out that they were not taking a position on the amount of additional unemployment benefits to offer. There are arguments for both parties, they said. On the one hand, money provides much needed liquidity, but on the other hand, high rates of pay can discourage some from returning to the labor market.
Many other people have opinions on supplementary unemployment benefits.
Several Republicans noted that many workers could make more money from unemployment during the Senate debate on the CARES law. They proposed an amendment that would pay workers their lost earnings, nothing more.
“Let us give them a helping hand and we will not apologize for a minute,” said Senator Dick Durbin, Democrat from Illinois.
The amendment failed and senators unanimously approved the bill in late March. in one declaration After the bill was passed, the Secretary of the Labor Department, Eugene Scalia, noted that the improvement in unemployment benefits and other measures “will put businesses and workers in a better position to return to work and revive the economy once the virus is contained ”.
Since then, the Democratic majority in the House of Representatives has passed the HEROES law, which, among other things, would extend the same additional unemployment benefit by $ 600 until January. Senator Mitch McConnell, the leader of the Republican majority, rejected the bill as a Democratic “wish list”.
Treasury Secretary Steven Mnuchin said Congress will likely have to pass yet another relief bill, but unemployment benefit rates should be addressed. “We have to respond to the whim that, in some cases, we actually pay people more than they earn,” he said.
Other studies suggest that millions of people are struggling to make ends meet and are using government money to meet their needs. According to a recent YouGov report, almost a third of recipients of stimulus checks (30%) say they use the money to pay their bills.