Employers find $600 coronavirus unemployment checks tough to compete with as states slowly reopen
Some employers are having a tough time getting workers back on the job as coronavirus restrictions loosen in parts of the country.
Senior Trump administration officials opened the door this week to a potential compromise on unemployment benefits, signaling they may consider approving a narrow extension of jobless aid in the next coronavirus relief package.
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In less than two weeks, the extra $600 a week in unemployment benefits — part of the massive $2.2 trillion CARES Act passed in march — will expire and the typical check, which varies by state, will return to below $400 per week.
EXTRA $600 IN UNEMPLOYMENT BENEFITS ENDS NEXT MONTH AS MILLIONS OF AMERICANS REMAIN OUT OF WORK
It will affect about 25 million Americans and drain roughly $15 billion per week from the economy, according to one estimate from the Century Foundation.
Although Democrats have pushed for the additional aid to be extended through at least the end of the year, the Trump administration and Republicans have argued the boosted benefits are actually disincentivizing some Americans from returning to their jobs.
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About two-thirds of workers on unemployment are receiving more government aid than what they earned at their old job, according to a paper written by economists at the University of Chicago's Becker Friedman Institute.
But Treasury Secretary Steven Mnuchin suggested the administration may replace the $600 a week in the next stimulus package with another form of unemployment assistance. However, it would cap benefits so that workers don't receive more money than they did at their previous job.
“You can assume that it will be no more than 100 percent" of a worker's salary, Mnuchin said.
Larry Kudlow, the president's top economic adviser, also said this week the administration is looking into "some unemployment reforms."
"It is increasingly clear that there will be an additional package," he said. "We'll try to make it targeted."
According to The Washington Post, one potential compromise discussed by Republican lawmakers is cutting the unemployment benefit from $600 per week to between $200 and $400 per week, in addition to sending a second stimulus check to some low-income Americans.
Senate Majority Leader Mitch McConnell said Monday the package would include “unemployment insurance for those unable to get back to work," although it's unclear how much aid that would entail.
SECOND STIMULUS CHECK STILL ON THE TABLE DESPITE BETTER-THAN-EXPECTED JOBS REPORT
The Trump administration has also floated the possibility of providing a back-to-work bonus for unemployed Americans returning to their jobs. One proposal from Sen. Rob Portman, R-Ohio, would provide $450 weekly to laid-off Americans returning to work in addition to their wages. Another from Rep. Kevin Brady, R-Texas, would give either a one-time lump sum payment of $1,200, or two weekly payments of $600, to recipients of unemployment returning to their jobs.
Lawmakers and the administration are set to resume negotiations next week, once the Senate returns from its two-week recess. McConnell has said he hopes to pass legislation before the House's recess starts at the beginning of August.
The end of the sweetened benefits comes amid a renewed threat of more layoffs as the U.S. battles a resurgence of COVID-19 cases. Some states have hit pause on their plans to reopen, while others are reimposing restrictions they had previously lifted, like shuttering restaurants and bars. Workers at Levi's, United Air Lines and Wells Fargo learned this past week they were — or could be — laid off or furloughed soon.
|LEVI||LEVI STRAUSS & CO.||12.63||+0.33||+2.68%|
|UAL||UNITED AIRLINES HLDG.||36.37||+4.63||+14.59%|
|WFC||WELLS FARGO & COMPANY||25.35||+1.10||+4.54%|
A historically high number of Americans are still seeking aid: Last week, another 1.3 million workers applied for unemployment relief. It marked the 16th consecutive week that jobless claims came in above 1 million; before the pandemic, the record high was 695,000 set in 1982.
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