Tens of millions of Americans have lost their jobs since the global COVID-19 pandemic turned into a U.S. crisis in March, and while the country’s overall unemployment figures fell in both May and June, the official unemployment rate remains at a painfully high 11.1%. – worse than ever during the Great Recession. And as has been pointed out by Fortune, Motley Fool, and other media, the Bureau of Labor Statistics is probably significantly underestimating the number of unemployed workers due to various ongoing problems. Meanwhile, the US economy is in a new recession, and the country is in the midst of its worst increase in COVID-19 cases to date, establishing daily records for new diagnoses.
Therefore, it is a particularly bad time for one of the government’s most effective emergency economic stimuli and human aid measures to wear thin. However, on July 31, the $ 600 increase that the CARES Act started for weekly unemployment checks is about to end. And once that happens, many of those tens of millions of jobless Americans will begin to find a real fight to cover even their basic bills.
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How are unemployment benefits without the boost?
Today, large numbers of Americans are unemployed, collecting payments that, under normal conditions, would average in the United States about $ 380 per week.
Thanks to the $ 600 a week in additional emergency benefits still at stake, the average unemployment recipient is raising $ 980 a week instead, a figure chosen by Congress because it would allow the average US worker It would come even closer in relation to what they had been doing before.
But if that program doesn’t extend, then, shortly, the average pay will drop to $ 380. Based on that, the average unemployed worker will only replace about a third of his previous paycheck, according to the WE Upjohn Institute for Research. of Employment.
Of course, unemployment benefits differ from state to state, and also depend on the applicant’s past earnings. States tend to set their neighborhood benefit levels at 50% of a person’s previous income, up to a limit that somehow reflects differences in local cost of living. Still, some of those ceilings are uncomfortably low.
In Mississippi, with the nation’s least generous unemployment benefits (and lowest cost of living), the average unemployed worker raised $ 213 a week before the pandemic. Massachusetts, which has the sixth highest cost of living, has the most generous benefit: Its average recipient raised $ 552. But nationally, $ 380 a week doesn’t sound good.
Will the $ 600 increase be extended?
Democratic lawmakers in Congress have been fighting to extend the weekly $ 600 increase in unemployment, alleging that Americans and the economy at large still need that relief. However, Republican lawmakers have been strongly against continuing the program and for several reasons.
On the one hand, they argue that as restrictions on business and personal activity are eased and the economy is revived, the need for additional relief will not be as intense. (Republicans have applied the same argument in the context of their opposition to a second round of widely distributed stimulus controls.) Additionally, some fear that extending the $ 600 raise will discourage people from returning to work, especially since many former low-wage workers have been collecting more unemployment benefits than were paid for their work.
But the current spike in new U.S. COVID-19 diagnostics could easily cause states and businesses to slow down or reverse their reopening plans, leading to yet another spike in layoffs. That adds weight to the argument that this would not be a good time to disconnect a benefit that makes it possible for struggling families to put food on the table and pay their bills.
The House of Representatives and the Senate only have a few more weeks to go head to head before the end of July comes, and the solution may come down to a compromise, perhaps a small weekly boost in unemployment to replace more of the dismissed workers. Paychecks, but not such a big boost that people who might return to work are motivated not to. But one thing is for sure, living on $ 380 a week isn’t feasible for many people, and if Congress doesn’t act, millions of Americans will spend the second half of 2020 struggling to stay afloat.
