Leaders of a number of progressive organizations are lobbying Congress to extend the additional $ 600 in unemployment benefits due this week.
In a letter to be sent out Wednesday afternoon, leaders of progressive advocacy groups such as the Center for American Progress, MoveOn, the Institute for Economic Policy and the Roosevelt Institute, as well as the International Union of Service Employees, said that reducing benefits would lead to “economic calamity”.
“Unemployment insurance keeps the economy afloat,” they wrote in the letter, which was obtained exclusively by The Hill.
“This $ 600 increase in unemployment benefits has helped millions pay rent, buy groceries, and keep the lights on. Reduce workers’ incomes now, by any amount, before it is safe to return to work, and Although there are still more than 3 times as many unemployed workers as job offers, they will further hurt demand, “they added.
The question of benefits has been front and center in the debate on the upcoming coronavirus relief package. In March, Congress agreed to $ 600 as a way to lower the average level of unemployment compensation with average income.
A more specific approach to simply ensuring that people’s benefits matched their pre-pandemic wages would have taken months to implement.
But an analysis by the Congressional Budget Office found that the additional $ 600 resulted in 5 out of 6 recipients earning more from unemployment than they worked for, creating a perverse incentive. People who want to go back to work would actually see a decrease in their income, a key point for Republicans who demand that the benefit be reduced to $ 400, if not more.
Some advocate additional stimulus controls to compensate for part of the difference in loss of benefits in a way that does not discourage work.
Progressives say that historical unemployment levels, which far exceed job vacancies, mean that companies should have no problem filling them. Profit, they say, should stay in place until unemployment falls to a more manageable level.
Democrats extended the current benefits in their $ 3 trillion version of the aid law, the HEROES Act, which was passed in May.
Progressives also point out that politics has implications for racial disparities.
“Black and brown workers have been disproportionately hurt by all aspects of this crisis, including higher infection rates and higher unemployment rates than their white counterparts,” the letter says.
“Cutting this support now would be economically devastating for communities of color, most women of color, who, because of structural racism, already have less than a financial cushion to trust,” she continued.
In recent weeks, many economists have warned of the economic implications of reducing supercharged unemployment benefits. S&P Global estimated that reducing the profit to $ 400 would reduce annualized economic growth in the third quarter by 4 points.
A June report from the Federal Reserve said that in August “it will be difficult for many families to meet their financial commitments (rent, food, utilities and other payments) if the economic recession continues and benefits are not renewed.”
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