Over 25 million jobless workers will take a financial hit at the end of this month if Congress refuses to extend the $600 enhanced unemployment benefit, according to a report from The Century Foundation, a liberal think tank.
The payment was part of the March CARES Act and is scheduled to expire on July 26. The Democratic House passed legislation in May that would extend the program into next year. The Republican Senate has not yet acted on that or other legislation.
The weekly $600 payment has become a political football on Capitol Hill, as Democrats would like to extend it, while Republicans oppose the idea. Many conservative lawmakers perceive it as a disincentive to return to the workforce since many of the recipients out-earn what they made at their prior jobs.
This sentiment was echoed by Harvard economics professor Raj Chetty on Thursday during an event on what the Senate should include in its next relief package, which was sponsored by the left-leaning think tank, the Center on Budget and Policy Priorities.
“Some folks are getting unemployment benefits that are larger than what they were getting paid [at] their previous jobs. That really potentially creates some wealth disincentive effects,” he said, adding that unemployment compensation “should replace a certain fraction of your prior wages.”
That is not the case with the $600 payment, as 63% of jobless workers currently make more on unemployment with the federal supplement than they would working, according to a May report from the American Action Forum, a right-center think tank.
The Forum report goes on to state that “even if the federal supplement is reduced to $100 a week, 25% of the U.S. workforce could still make more on unemployment than returning to work.”
[Related: Trump backs second and bigger round of relief checks]
On average, unemployment benefits across the country were $385 per week in February 2020, according to the House Ways and Means Committee. When combined with the added benefit, jobless workers receive nearly $1,000 a week. The median salary for a grocery store cashier, an essential worker, is roughly $600 a week, according to Salary.com.
Still, the Century Foundation points out that without the supplemental payment being extended through the rest of the year, the poverty rate would jump from 12.3% to 16.3% and negatively affect a large portion of nonwhite unemployed workers.
Senate Majority Leader Mitch McConnell, a Republican from Kentucky, opposes extending the $600 payment. However, Treasury Secretary Steven Mnuchin, on Thursday, said the payment could be extended but not at the current $600 rate.
He also said that the payment should not be above a person’s former salary when they were employed.
“You can assume that it will be no more than 100% [of the former salary],” he said. “So, yes, we want to incentivize people to go back to work. … Enhanced unemployment is intended for people who don’t have jobs. … We will not be doing it in the same way.”
