A large majority of recipients would earn more from benefits than from work if the $600-a-week pandemic unemployment benefit boost is extended past its July expiration, the Congressional Budget Office estimated Thursday.
“Roughly five of every six recipients would receive benefits that exceeded the weekly amounts they could expect to earn from work,” the CBO, Congress’s in-house group of budget and economic experts, stated in a June 4 letter to Republican Sen. Chuck Grassley of Iowa.
Grassley chairs the Senate Finance Committee and requested the CBO investigate the economic effects of extending the $600 payment beyond its current July 31 expiration to Jan. 31, 2021. The Democratic-led House approved a measure on May 15 that extends the $600 payment to Jan. 31, 2021, for most unemployed workers.
Grassley called the scenario “unhealthy for the economy” and “unhealthy for the individual.”
The CBO also found that extending the boosted benefits would reduce the level of employment, as people would choose to receive jobless benefits over returning to work.
Senate Majority Leader Mitch McConnell, a Republican from Kentucky, has vowed to not extend the $600 payment beyond its July 31 expiration.
Many Senate Republicans, such as Thom Tillis from North Carolina, Rand Paul from Kentucky, Shelley Moore Capito from West Virginia, and Mitt Romney from Utah, have warned the $600 payment entices jobless workers to remain unemployed and that it should be modified. However, there is no consensus on how it should be changed.
Larry Kudlow, the top economic adviser for the administration, said on May 26 that the White House is examining a proposal by Republican Sen. Rob Portman of Ohio that would incentivize jobless workers to return to employment by giving them a weekly bonus.
“It’s something we’re looking at very carefully. Sen. Portman has a good idea,” Kudlow told Fox News.
Portman’s proposal would provide a $450-a-week bonus for individuals who return to work. This amount would be in excess of the salaries or wages they receive and is meant to counter the $600 pandemic payment boost to unemployment benefits.
However, with double-digit unemployment rates expected to continue into next year, Senate Republicans might have a hard time selling the public on the idea of replacing the $600 payment with a bonus for hires that might not happen.
“The unemployment rate is still going to be pretty high, maybe for some time. Even as the economy starts to open up and expand again, it will take a while for some of the jobs to come back,” Senate Majority Whip John Thune, a Republican from South Dakota, told Politico. “So I suspect the program will be needed for a while. We’ll have to come up [with] some sort of solution.”
