Federal funds for unemployed workers

  • Oct 24,2020

When the pandemic drove into America, and the lockdown started a lot of people were left without a job. The congress voted to give $600 per week to all the states that paid insurance for unemployment. That money was a need for many because the state unemployment benefits are replacing less than half of the worker’s paycheck. With this additional amount, the paycheck of many low-income workers was more than they have earned before. 

Now this $600 boost is about to end, and Congress must decide to cut it, continue it, or made it less than $600. The lawmakers on both sides are thinking about reducing the version of the payment. 

The republicans said that this system will encourage the workers to stay unemployed. Cutting those federal payments would give more pressure to the workers to get back to work. On the other hand, if they stop the federal payments it will be more difficult for the people to pay their rent, write mortgage checks, make car payments and care for their families. 

In addition, those federal payments would provide a substantial boost for the economy. If Congress remove those federal payments probably it will undercut the economy. 

Unemployment insurance payments are determined for each state. In the first four months of the year 2020, they were averaged $373 a week. The additional $600 per week as part of the Congress’s $2.2 trillion relief package CARES which has been active and passed in March. 

The employers are already struggling to recall their workers back, but while there are the federal payments, looks like nobody wants to work. A May 18 survey by the National Federation of Independent Business, reported that 18% of 685 employees had declined a job offer to stay unemployed and use the unemployment benefits.

Holly Wade, director of research and policy analysis at the federation says that usually, it’s difficult to hire someone even in the best possible situation, and when there is a government program like that it’s harder. 

In Maine, they seemed to be doing better than most of the other states, because the unemployment rate has dropped back to 6.6%, compared with 11.1% for the nation. Michael Collins said that he is trying to bring back the dine-in service at his Arby’s. He has retired only one of the six employees, who have been working there before the lockdown. The other five said that they don’t need to work when they can get pay staying at home and doing nothing. Maybe if those $600 will be cut out, more people will come asking for work. 

Since mid-May, the health crisis and with it the economy had become worse.

At the beginning of this month, the opening and the revenues of the small business, and job posting have turned down. Harry Holzer, a public policy professor at Georgetown University, is saying that before that he was thinking that it’s time to cut off those $600 because there are is evidence of new hiring activity. But after the beginning of this month, he agreed that is better if the government continues giving help to the people. 

Many people think that if Congress cut down the federal payments or reduce it to $200-$400, it will take billions of dollars out of the economy at the wrong time. 30 million people were claiming the unemployment benefits since May. They are thinking that those $600 federal payments will add $18 billion weekly payments.

This is helpful for many people not only for paying their rent but also for other expenses including healthcare. Most Americans have insurance through their job, and now when they are unemployed, they are without their normal coverage. 

Those $600 is based on nationwide averages and distributed as a flat payment to everyone who applied for unemployment assistance. Two-thirds of those people might be receiving more than their lost wages.