Editorial: Congress should trim federal jobless benefits
As members of Congress continue to work on a next round of coronavirus aid, they must seek a compromise that sends funding to those most in need but doesn’t inadvertently make it harder for employers to find workers and consequently keep unemployment numbers high.
One of the areas most in need of attention is the $600 a week federal supplement to unemployment benefits. That additional boost was included in the CARES Act, the $2 trillion aid package that passed in late March. States will stop paying out the additional funding at the end of this week, which makes the timing critical.
The extra $600 a week not only helped many jobless workers get through the last few months, but in many cases it offered the unemployed more money than they would have received at their jobs. That’s been true for around 70% of individuals receiving unemployment insurance.
This has served as a disincentive for workers — especially low-wage employees — to go back to work.
When that extra benefit ends, however, the average person on unemployment in the U.S. will receive $383 a week. In Michigan, the maximum weekly benefit is $362.
Congress is likely to extend the benefit in some form, although the Democratic-controlled House and the Republican Senate are still far apart on a solution.
Senate Majority Leader Mitch McConnell is looking to offer a $1 trillion package, a far cry from the $3 trillion offering the House passed in May. The White House has complicated discussions with demands of its own, even differing with Senate Republicans on some matters of funding.
House Democrats want to continue the federal supplement through January. McConnell’s plan, on the other hand, is expected to replace the $600 weekly benefit with a lower amount, likely a percentage of the state benefit that would help ensure individuals don’t receive a windfall by not working.
This is what Congress should be doing, writes Rachel Greszler, research fellow in economics, budget and entitlements at The Heritage Foundation. She notes the federal add-on is “weighing down” the country’s economic recovery.
“As Congress considers proposals to alter or extend this benefit, it should replace it with a temporary and partial federal match to state unemployment benefits, and also pursue policies that foster job flexibility and work opportunities,” Greszler writes.
Brian Calley, president of the Small Business Association of Michigan, says he’s heard concerns from business owners around the state. In addition to having a tough time finding employees who want to come back to work, some employers are even apprehensive to ask workers to do so, knowing the worker could make more on unemployment.
Calley says this has complicated the employee-employer relationship, and even added strains with employees who weren’t laid off to begin with.
“What we are hopeful for is some return to a form of the unemployment system more normalized in its structure, tied to employees’ income before they were laid off,” he says.
Congress needs to find a balance in its next aid package to help the economy rebound.