Pandemic unemployment benefit is set to expire. Will a back-to-work bonus replace it?
In a few weeks, that extra $600 a week that Washington’s unemployed workers now get will be gone — and it’s unlikely Washington will revive it.
To encourage people to return to work, Republican lawmakers and the White House are considering a plan to pay newly employed workers a bonus of $450 to $600 weekly for a few weeks
The extra $600 a week was part of the March law aimed at cushioning the economic pain triggered by the coronavirus pandemic. But it expires at the end of July, meaning a sudden drop in unemployment payments.
The Trump administration is unenthusiastic about extending the $600 benefit.
“The circumstances that originally called for the $600 plus-up will have changed; policy will need to change as well,” Labor Secretary Eugene Scalia told the Senate Finance Committee this week.
Studies repeatedly show that lots of people, particularly lower-wage workers in the food, hospitality and retail industries, are getting more income not working than they were earning at the jobs they lost.
Nationally, construction workers and people who had jobs in retail and sales and food service, or as medical assistants and janitors, were often receiving more in unemployment payments than they were earning while working, a University of Chicago study found.
Traditionally, unemployed workers can figure on getting half their regular earnings as unemployment benefits — enough to live on but also enough to provide incentive to keep looking for a job.
Median income for an individual this year in Washington is an estimated $50,944, and for a family of four, $97,788, according to state government data.
Maximum unemployment payment in Washington is currently $1,390 per week, or an annualized $72,280. That’s second only to Massachusetts, where the annualized maximum benefit is $73,996. Lowest is Mississippi, at $43,420. The data were compiled by Zippia, a Millbrae, California-based firm that helps people find jobs and careers.
A back-to-work bonus
Rep. Kevin Brady, the top Republican on the House Ways and Means Committee, maintains that the extra $600 a week “makes it nearly impossible for local businesses to hire.”
Democrats counter that while the nation’s unemployment rate unexpectedly fell in May, it was still at 13.3%, well above a level not seen since the Great Depression of the 1930s. The latest reported Washington state rate was 15.4% in April, the highest rate since the state began keeping similar records in the 1970s.
While some people have been able to find other work, said Rep. Derek Kilmer, D-Washington, last month, “right now, public health professionals don’t want folks out pounding the pavement. Temporary assistance doesn’t replace a permanent job, but may be necessary when someone has lost their job at no fault of their own.”
The Democratic-run House wants the current $600 a week benefit to continue. Last month it passed legislation extending the $600 payment through January. The White House and Republican leaders are unenthusiastic.
There were doubts about the program’s effectiveness among many Republicans before it passed; an effort to limit benefits to the amount a worker had been earning failed in the Senate on a tie vote.
What has their attention are back-to-work bonus plans. One authored by Sen. Rob Portman, an Ohio Republican, would provide $450 a week for up to six weeks to people who return to work before July 31. He would also consider including his proposal in compromise legislation affecting people who find work after that date.
A proposal championed by Brady, a Texas Republican, would pay them $600 a week for two weeks once they returned to work before July 31.
The White House has been warm to the bonus idea. “We may go with something like that,” National Economic Council Director Larry Kudlow told CNBC.
Portman arrived at the $450 a week figure after studying wages and unemployment benefit formulas for every state, and then calculating what he called “the amount that would be needed to make a person making the average minimum wage better off in the workforce than on unemployment.”
The potential flaws
Critics see three flaws with ending the $600 a week and replacing it with a back to work bonus:
▪ States are having enough trouble with the current system. Washington, like many other states, has been overwhelmed by an unprecedented number of claims since mid-March. Complicating its task has been the addition of two new federal benefit programs.
The state’s Employment Development Department is hiring or reassigning people to handle the caseload. It only began implementing the Pandemic Unemployment Assistance until late April, and the program providing an extra 13 weeks was formally unveiled late last month.
▪ Finding a job will be difficult. “Given the dire economic outlook and that labor markets always take a longer time to recover, many individuals will have a harder time finding a job, or are likely to be laid off again,” warned Till von Wachter, faculty director of the nonpartisan California Research Lab, which has studied the benefit’s impact.
That means people would once again have to rely on jobless benefits. “A $450 re-employment bonus will not be able to replace a $600 in providing effective insurance against very low income levels. This is even more so given that many jobs are likely to remain unsafe and given that many individuals may have child care obligations,” he said.
▪ Many people are nervous about returning to the workplace. Though the coronavirus pandemic’s spread appears to have eased somewhat, it’s still a serious threat.
“It looks as if the virus is going to be with us for a while and there are people who need to remain safely at home,” said Michele Evermore, senior researcher and policy analyst at the National Employment Law Center.
None of those arguments appear likely to keep the $600 benefit around past mid-summer. “It made sense when you wanted to make sure no one went to work,” said Douglas Holtz-Eakin, president of the American Action Forum, a research group.
But with the virus’ reach eased, said Holtz-Eakin, the chief economic adviser to Republican presidential nominee John McCain in 2008, a benefit that perhaps phases out as people keep their jobs, or the economy recovers, makes some sense.
The important point, said Holtz-Eakin, is that “You don’t want to let it get in the way of work.”
This story was originally published June 10, 2020 at 8:54 AM with the headline "Pandemic unemployment benefit is set to expire. Will a back-to-work bonus replace it?."
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