Tens of millions of Americans who have lost their jobs in the past few months have received an additional $600 a week in federal unemployment benefits on top of standard unemployment benefits offered in their state. For many families, this increased benefit is their economic lifeline. But by July 31st the extra benefit will be over. According to the Us Consumer News and Business Channel, this could have dire consequences for millions of American families.
During the outbreak, along with other aid measures, the additional $600 in benefits helped many Americans weather the storm, and some even saved more money than usual. Without an additional $600, these people would only receive $378 a week. That means their incomes will suddenly fall by 60 per cent, while there is no other stimulus package to rely on.
Arindrajit Dube, an economics professor at the University of Massachusetts at Amherst, said on Twitter that ending the benefit, due on July 31, would be a “bad idea.” Many households have already spent the one-off stimulus they receive, and unemployment is expected to remain high until 2021. “This will cause misery to millions of families, drag down economic activity and hinder economic recovery.” Arindrajit Dub said.
Among them, vulnerable groups, including people of color, young people, low-income workers and women, will be most affected. Renters tend to earn less, and they will be particularly hard hit. When government supplementary benefits expire and unemployed tenants receive only basic unemployment benefits, their incomes will fall “in a break” and many will “be unable to afford food, clothing and other living expenses,” according to a study.
Even if this were the case, many people would not agree to extending this additional benefit.
For example, a recent report by the nonpartisan Congressional Budget Office concluded that “extending the $600-a-week subsidy could lead to fewer jobs in the second half of 2020 and fewer jobs in 2021.” “
Matt Weidinge, a researcher at the American Enterprise Institute who studies unemployment insurance, says the $600-a-week subsidy is intended to encourage people to stay at home in an unprecedented “once-in-a-lifetime” health crisis, and now that most states have reopened, the enhanced benefit “should expire at the end of July as planned”, or policymakers need to provide another reason to extend the benefit. “You want to help people, but you want the economy to recover,” matt Weidinge said. “If supplementary benefits continue, the recovery will be slower and people will be less likely to recover.” “
However, the fact is that some 21 million people are still unemployed, even as the states begin to reopen. No matter how eager people are to get back to work, their jobs will not recover overnight. With little to do in some places to contain the outbreak, the reopening state’s new crown infection rate has risen sharply, leaving people returning to work with serious health risks.
In addition, deep cuts in unemployment benefits reduce incomes, which means fewer people spend on restaurants, shops, barbershops and other businesses that reopen in many parts of the United States. As customers fall, many people who can return to work may find themselves still unemployed.
So the U.S. faces a potentially difficult decision on whether to extend the duration of the extra unemployment benefits.