The increased unemployment benefits included in the $ 1.9 trillion pandemic aid package signed on Thursday by President Biden could keep billions of dollars a week in the stimulus flowing into the economy over the summer.
The plan expands two pandemic-related programs and extends the additional $ 300 payments to all laid-off workers receiving unemployment benefits through early September – long after the $ 1,400 check for people who are likely to fade. About 20 million people received unemployment benefits in mid-February, up from 2 million a year earlier, raising more than $ 10 billion in additional incentives a week.
Some economists say extending the additional unemployment benefits for nearly 18 months is a deterrent for some people to return to work, preventing industries such as logistics, construction and some retailers from finding employees as the economy recovers.
Other economists say the payments have boosted many lower-income families, who have disproportionately lost their jobs in the coronavirus pandemic, while pushing money back into the wider economy. The United States had 9.5 million fewer jobs in February than a year earlier, according to the Department of Labor.
“Things are getting better, but we still have a lot of massive jobs,” said Heidi Shierholz, a doctor. economist at the Institute for Economic Policy who served in the Obama administration. “Unemployment benefits will help some people go through what could still be very hard in the next few months,” she said.
The law allows unemployed workers, including the self-employed and other people who are not normally eligible for any benefits, to receive unemployment assistance until 6 September. With the weekly improvement of $ 300, the average weekly allowance for those who qualify through regular state programs is about $ 620 per week, according to the Department of Labor, about the equivalent of full-time work at $ 15.50 per hour.
A person who has been receiving the average level of benefits since last March was reportedly paid about $ 30,000 last year. The extension could allow that person to receive about $ 15,000 more.
Economists expect the economic stimulus and a easing pandemic to stimulate economic growth to almost 6%, which would be the fastest pace in almost 40 years. However, additional government spending over the past year has led to rising federal deficits and risks fueling inflation.
At the end of January, there were 6.9 million jobs in the United States, the Labor Department said on Thursday, just under a year earlier, just before the pandemic. But there are more jobs available in some areas.
Job search site Indeed.com said there were nearly 40% more jobs in manufacturing and warehouses at the end of February compared to a year earlier. Openings for pharmacies and construction increased by over 30%.
President Biden signed the $ 1.9 trillion Covid-19 law, giving Americans an economic boost. Gerald F. Seib of the WSJ breaks down what is on the bill and why it is significant to the Biden administration. Photo illustration: Laura Kammermann
The extended benefits create an impediment to hiring employers in these industries, said Marianne Wanamaker, a PhD. labor economist at the University of Tennessee who served in the Trump administration.
“By giving people an easy way out, you’re building their ability to get back into the workforce,” she said. “And we know the more people don’t work, the harder they struggle to get back.”
Those who have not worked for a year or more may see their abilities atrophied and face a stigma around a long unemployment gap in their resumes. They also make life adjustments, such as moving in with family members, which can cause them to quit their jobs, Dr. Wanamaker said. “A mismatch between labor supply and demand is a recipe for higher inflation and slower economic growth,” she said.
The recent guidance of the Department of Labor makes it possible for some workers to refuse job offers and remain in their benefits if they consider the job to be unsafe. Usually, redundant workers have to actively look for a job in order to receive unemployment benefits. Some people have not resumed their job search because their children’s schools are not completely reopened or they are worried about their illness.
Dr Shierholz said most people would opt for a permanent job, rather than be left with temporary jobless benefits, which are due to end by September. “And if people take a little longer to find a job, that can be a good thing for them and the economy,” she said. “They can find a job that suits their skills and interests, where they can be more productive and probably get paid more.”
Some employers say the $ 300 improvement provided this year is easier to manage than the additional $ 600 weekly payments included in the initial government aid package approved by Congress and signed by former President Donald Trump last year. These payments ended in July 2020.
A handful of workers at the Hoffman Car Wash locations in Albany, NY, asked not to be recalled last spring because their unemployment benefits paid more than they earned from cleaning cars, owner Tom Hoffman Jr. said. $ 300 did not cause the same problem and that he recently managed to find the workers he needs.
He said his business stays down from 2019 because people drive less and some customers are reluctant to clean the vehicle’s interior, the most intense work service.
“I think the $ 300 is helpful for the unemployed,” he said. “It doesn’t offer any discouragement like the $ 600 I saw last year.”
Write to Eric Morath at [email protected]
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