Why the Stimulus Bill As Written Will Keep Unemployment High
By David Henderson
It will increase weekly unemployment benefits by $600 and keep the unemployment rate high.
The economic aid package that Senate Democrats are currently negotiating with the White House includes a significant expansion of unemployment benefits for Americans who have lost jobs or been furloughed due to the coronavirus crisis. But it’s not quite what Senate Minority Leader Chuck Schumer has described publicly. Depending on who you are, it might actually be a better deal.
A better deal, that is, for people with unemployment insurance, that is, not for taxpayers. This is from Jordan Weissman, “The New Stimulus Bill Gives Unemployed Workers an Extra $600 per Week. That’s Huge,” Slate, March 24.
Senator Chuck Schumer (D, NY) even called the provision “unemployment insurance on steroids.” Unfortunately, he’s right.
The current draft bill, which was sent to me by a Democratic policy aide, offers jobless Americans a flat weekly payment of $600 on top of the ordinary unemployment benefits they would usually receive, for up to four months. It also extends regular unemployment insurance for an extra 13 weeks and makes more former workers eligible. The spending is federally funded.
So someone who would otherwise get, say, $300 a week for being laid off from a $600 a week job, would now get $900 a week. Think he or she would go back in the next 4 months? Not likely.
If this bill is passed, unemployment will remain high for at least 4 months. It’s one thing to give everyone a check. It’s another to purposely give a huge number of potential workers a super check per week for 4 months.
And the resentment by independent contractors and by other people who quit their jobs (I know of 6 locally, who because of their fear of the coronavirus, quit last week), none of whom will get these benefits, will be intense.
Note: In an earlier version, I made an unfair charge against Binyamin Appelbaum. I apologize. Thanks to commenter Daniel Kuehn below for pointing it out.