The improved unemployment benefits included in the $ 1.9 trillion pandemic relief package, signed Thursday by President Biden, could keep billions of dollars a week in stimulus flowing into the economy during the summer.
The plan expands two pandemic-related programs and extends the $ 300 supplementary payments to all laid-off workers receiving unemployment benefits through early September, long after the $ 1,400 check effect to people who are likely to they fade. About 20 million people took advantage of unemployment benefits in mid-February, up from 2 million the previous year, which was more than $ 10 billion in additional stimulus a week.
Some economists say extending the additional unemployment benefits for nearly 18 months is a disincentive for some people to return to work, preventing industries such as logistics, construction and certain retailers from finding employees as the economy recovers.
Other economists say the payments have provided a boost to many lower-income families, who have lost jobs disproportionately 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 massive hole in employment,” said Heidi Shierholz, a doctor. economist at the Institute for Economic Policy who was part of the Obama administration. “Unemployment benefits will help some people get through what could still be very difficult in the coming months,” he said.
The law allows unemployed workers, including the self-employed and others who are not usually eligible for any benefits, to take advantage of unemployment assistance until 6 September. With the $ 300 weekly improvement, the average weekly unemployment benefit for those who meet regular state programs is about $ 620. per week, according to the Department of Labor, roughly the equivalent of working full-time at $ 15.50 per hour.
A person who has received the average level of benefits since last March would have been paid about $ 30,000 over the past year. The extension could allow that person to receive about $ 15,000 more.
Economists expect an economic stimulus and a pandemic to slow to boost economic growth to near 6%, which would be the fastest pace in nearly 40 years. However, extra government spending over the past year has led to an increase in federal deficits and runs the risk of causing inflation.
By the end of January, there were 6.9 million unfilled jobs in the United States, the Department of Labor said Thursday, slightly less than a year earlier, just before the pandemic struck. But there are more jobs available in some fields.
Job search site Indeed.com claimed there were nearly 40% more openings in manufacturing and warehouse jobs in late February, compared to the previous year. Pharmacy and construction openings increased more than 30%.
President Biden signed into law the $ 1.9 trillion Covid-19 relief bill, which provided an economic boost to Americans. Gerald F. Seib, of WSJ, breaks down the content of the bill and why it is significant to the Biden administration. Photographic illustration: Laura Kammermann
The expanded benefits create an impediment to hiring entrepreneurs from these industries, said Marianne Wanamaker, a doctor. labor economist at the University of Tennessee who served in the Trump administration.
“By giving people an easy way out, you’re taking away their ability to get back into the workforce,” he said. “And we know that the more people don’t work, the more they struggle to come back.”
Those who have been out of work for a year or more may see skills atrophy 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 lead them to leave the workforce, Dr. Wanamaker said. “A mismatch between labor supply and demand is a recipe for higher inflation and slower economic growth,” he said.
Recent guidelines from the Department of Labor make it possible for some workers to turn down job offers and stay in profit if they believe the job is unsafe. Normally, dismissed workers must be actively looking for a job to receive unemployment benefits. Some people have not restarted their job search because their children’s schools are not completely reopened or are worried about getting sick.
Dr. Shierholz said most people would opt for a permanent job instead of staying with temporary jobless benefits that will end in September. “And if it takes people a little longer to find a job, that can be good for them and for the economy,” he said. “They can find a job that matches their skills and interest, where they can be more productive and probably pay more.”
Some employers say the $ 300 improvement provided this year is more manageable than the extra $ 600 in 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 Hoffman Car Wash locations in Albany, New York, asked not to be remembered last spring because their unemployment benefits paid more than they earned by cleaning cars, owner Tom Hoffman Jr. said. But he said the $ 300 improvement has not caused the same issue, and that he has recently been able to find the workers he needs.
He said his business continues to go down since 2019, because people drive less and some customers are reluctant to clean the interiors of vehicles, the service that requires more manpower.
“I think the $ 300 is useful for people who don’t have a job,” he said. “It doesn’t provide as much of a disincentive as the $ 600 we saw last year.”
Write to Eric Morath to [email protected]
Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8