Progressives ramp up pressure on $600 unemployment benefits
July 22, 2020 The Hill
Leaders from a slew of progressive organizations are pushing Congress to extend the additional $600 in unemployment benefits set to expire this week.
In a letter to be sent Wednesday afternoon, the leaders of progressive advocacy groups such as the Center for American Progress, MoveOn, the Economic Policy Institute and the Roosevelt Institute, as well as the Service Employees International Union, said cutting the benefits would lead to “economic calamity.”
“Unemployment Insurance is keeping the economy afloat,” they wrote in the letter, which was obtained exclusively by The Hill.
“This $600 boost to unemployment benefits has helped millions pay rent, buy groceries, and keep the lights on. Slashing workers’ incomes now, by any amount, before it is safe to go back to work—and while there are still more than 3 times as many unemployed workers as job openings—will further hurt demand,” they added.
The benefits question has been front and center in the debate over the next coronavirus relief package. In March, Congress agreed to the $600 as a way to bridge the average level of unemployment compensation with the average income.
A more targeted approach to simply ensure people’s benefits matched their pre-pandemic salaries would have taken months to implement.
But an analysis from the Congressional Budget Office found that the additional $600 resulted in 5 out of 6 recipients making more through unemployment than they did working, creating a perverse incentive. People wanting to go back to work would actually see their income drop, a key point for Republicans who are urging that the benefit be reduced to $400, if not lower.
Some are arguing for additional stimulus checks to make up some of the difference in lost benefits in a way that would not disincentivize work.
Progressives say that the historic levels of unemployment, which far exceeds job openings, mean companies should not have trouble filling jobs. The benefit, they say, should stay in place until unemployment drops to a more manageable level.
Democrats extended the current benefits in their $3 trillion version of the relief bill, the HEROES Act, which passed in May.
Progressives also note that the policy has implications for racial disparities.
“Black and brown workers have been disproportionately harmed by all aspects of this crisis, including higher infection rates and higher unemployment rates than their white counterparts,” the letter said.
“Cutting this support now would be economically devastating to communities of color, most acutely women of color, who, due to structural racism, already have less of a financial cushion to rely on,” it continued.
In recent weeks, many economists have raised alarms about the economic implications of cutting supercharged unemployment benefits. S&P Global estimated that reducing the benefit to $400 would shave 4 points off annualized economic growth in the third quarter.
A June report from the Federal Reserve argued that come August, “it will be difficult for many families to meet their financial commitments—rent, food, utilities, and other payments—if the economic downturn continues and the benefits are not renewed.”
Read on The Hill.