Part of the CARES Act, the $2.2 trillion coronavirus stimulus bill, guaranteed additional benefits for people unemployed. The unemployment boost proved critical, as tens of millions of Americans have struggled with joblessness since March.
On July 31st, 2020, however, the additional $600 weekly in federal aid expires. Approximately 30 million Americans are receiving the extra cash, according to NBC, but the government has no plans to extend the CARES Act benefits. Despite recent boosts in employment, joblessness remains at the highest levels in a generation, yet the safety net for the unemployed is being removed. What comes next?
From Unemployment to Back-to-Work Bonuses
On June 14th, White House economic advisor Larry Kudlow said on CNN that “the $600 […] is in effect a disincentive, we’re paying people not to work.” According to Kudlow, the additional unemployment bonus, which in many cases makes unemployment checks greater than people’s average paychecks, takes away people’s drive to work.
Kudlow went on to say that the next slate of reform will not extend the unemployment boost, but traditional unemployment benefits will not change. He also suggested that the White House may introduce a return to work bonus to incentivize people to get back into the workforce, but it will not be as significant as the unemployment bonus.
Kudlow stressed that he believed the economy is in “the recovery phase.” Congressional Republicans have long complained about the unemployment bonus as a disincentive and now have joined the call for a back-to-work bonus instead. Senator Rob Portman (R-OH), for instance, proposed a $450 weekly bonus for those who get back to work. Portman’s proposal is one that the White House is seriously considering, but with six weeks until the benefits expire no concrete plans have been laid out.
Democrats are fighting for the extension of the benefits, but it seems unlikely they’ll be successful. One popular plan from the left, the Worker Relief and Security Act, would still allow for $600 benefits in states still under a national emergency, with other states paying benefits on a sliding scale based on their state’s unemployment rate.
What Happens Next
Depending on who you ask, ending the $600 bonus will have very different effects on the economy. The Congressional Budget Office released a report in early June suggesting that the unemployment bonus would hurt the economy overall in 2021, despite boosting consumer spending.
On the other hand, many Democrats argue ending the benefits would seriously damage the economy. One study from 2008 suggests that spending on unemployment leads to GDP growth, and some liberal economists argue that unemployment will rise if these benefits are ended.
As of now, nobody knows for certain exactly what will happen. Anyone currently unemployed should expect the $600 bonus to end on July 31,m2020 but there should be more relief coming.
Some plans require employment within a certain timeframe, and others require no action on your part. Stay up to date on the news to see which plan will be implemented, and what comes next for those on unemployment.