Unemployment Benefits Feature in Debate Over New Stimulus Bill
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What is the current unemployment and stimulus context motivating this episode?
Here's your Money Briefing for Friday, June 12th. I'm J.R. Whelan for The Wall Street Journal. We've seen some signs that the economy is starting to recover from the coronavirus pandemic, but there are still more than 20 million people out of work. And that puts the prospects for a second round of stimulus top of mind. But there's a wrinkle. As Congress debates how to provide economic relief, it wants to ensure that it makes financial sense for people to go back to work when businesses reopen and not rely on jobless benefits.
A lot of people without jobs right now, they're actually collecting more in benefits than they were making when they were working. And part of the reason for that is Congress just needed to pass something very quickly. States didn't really have a lot of ability to tailor payments. So, for example, if you said we want people to make, you know, 80 percent of their wage, it was difficult to do that. And so they just said, all right, extra 600 for everybody.
That's our reporter Kate Davidson. Coming up, she'll discuss the incentives that Congress is considering to get people to go back to work.
The sweetened unemployment benefits in the federal stimulus package were so sweet it made more sense for some people to not return to work. That's a major topic of discussion as Congress puts together another round of stimulus. Our reporter Kate Davidson is with us to explain. So, Kate, let's start with, you know, where do things stand with support for a second round of stimulus among lawmakers and the White House?
Well, the conversations are really in the very early stages. I think the administration is just really in the last few weeks, I think, starting to think about the types of proposals that they would support. On the House side, House Democrats have actually already advanced a bill, a fairly large one. CBO said it would cost about three and a half trillion dollars that would do a bunch of things, mainly extending a lot of the support that we already know about, more stimulus payments, aid for states, or much more aid for states that actually they feel like there hasn't been enough of that yet, and extending unemployment benefits. Republicans are a little more uncertain. They raise concerns about all the spending that Congress has already done, and they've sort of cautioned
The lawmakers should take a slower approach, really get it right, figure out which areas of the economy need the most support before they pass another bill.
Now, a stimulus check is on the table, but its unemployment benefits as part of the overall package, that's got Congress weighing a lot of numbers.
Yes, it does. So one of the issues that lawmakers have with these unemployment benefits, these enhanced payments, is that a lot of people without jobs right now, they're actually collecting more in benefits than they were making when they were working. And part of the reason for that is Congress just needed to pass something very quickly. States didn't really have a lot of ability to tailor payments. So, for example, if you said we want people to make, you know, 80 percent of their wage and It was difficult to do that.
How did enhanced $600 weekly benefits come to be and why were they uniform?
And so they just said, all right, extra 600 for everybody. But now Republicans are raising concerns that, well, you know, are workers not going to want to come back to their jobs if businesses reopen because they're making so much in unemployment? There's not really much data that's supporting that. There's a lot of anecdotal evidence. But nevertheless, that's an issue that I think everyone agrees the payments are not going to be just extended at the same level. So what's the right number? Do we shrink them to $300? Is it $400? Do we set it as a share of people's wages and just hope that states have time to figure it out? It's very complicated.
And what kind of back-to-work incentives are being floated
Well, there's one idea that's gotten a lot of attention from Senator Rob Portman, and he would essentially provide kind of a back-to-work bonus for workers. And I think the general idea is, you know, that if workers are going to forego this extra money, if you will, through, say, the end of the year, that they would get some portion of that, almost like a, you know, like I said, a bonus for going back to work, that they're giving up these enhanced benefits.
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