Should Emergency Unemployment Be Extended?

One of the key elements to the aid package passed by the federal government to combat the coronavirus was emergency unemployment insurance. The federal government gave those on unemployment an additional $600 a week on top of state benefits. The extra money expires on July 31st. Should emergency unemployment be extended?

The Benefits Of Extra Unemployment

The coronavirus caused an unprecedented shutdown of the American economy. The unemployment rate skyrocketed to record levels. Through no fault of their own, millions of Americans found themselves applying for unemployment for the first time.

Democrats in Congress pushed for an extra $600 a week in unemployment benefits on top of state benefits. The number is symbolic, as it represents the wage one would earn if their pay was $15 an hour for a 40-hour workweek. Republicans initially protested the idea, but ultimately voted for it.

The reasons for extra unemployment are simple. Putting money into people’s hands keeps the economy running. Millions of people lost their job due to government-mandated shutdowns. Therefore, it only made sense for the government to compensate.

Strict measures were put into place to prevent abuse of this system. You couldn’t receive extra unemployment once your job was offered back.

Combined with the stimulus check that went out to most Americans, the efforts were a success. Even though the unemployment rate went through the roof, the economy did not completely collapse. The efforts were so successful some Democrats started to push for a full-on Universal Basic Income.

The Case Against Extending The Extra Unemployment

Republicans opposed the unemployment from the start. The main argument is that such generous unemployment benefits create an incentive to not work. Some wanted to cap the extra money at 100% of a person’s normal income.

The program is obviously costly for the federal government. Over 40 million Americans lost their jobs in the first weeks of the lockdown. We are still averaging over 1.3 million new unemployment claims a week as of Thursday. To put that number into perspective, the historical average is closer to 300,000.

Those that didn’t get laid off complained that those on unemployment were earning more by staying home than they got working. Outside of a one time $1200 stimulus check, essential service workers were left out of the loop.

Republicans have floated alternatives to emergency unemployment now that the states have reopened for business. One idea that has come up a lot is to award a back to work bonus for those currently getting unemployment. As stated earlier, others have suggested capping the extra benefits at 100% of a worker’s normal salary.

What Will Congress Do Next?

Will emergency unemployment be extended? It seems likely that some form of aid will be provided going forward, but probably not the generous benefits that are currently going out. We are in an election year, and doing nothing is simply too dangerous for politicians.

Another stimulus check seems a given at this point. However, it is unlikely to be big enough to carry those on unemployment through the election. Unfortunately, partisan posturing could delay any aid measures, as both parties jockey for position ahead of the 2020 election.