3 Reasons Why Americans Need More Federal Assistance

3 Reasons Why Americans Need More Federal Assistance

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On Friday, he will sign additional executive orders that will provide more assistance to working families.

Democrats have made it clear that another far-reaching economic relief bill, including $ 1,400 stimulus payments, will be their first legislative priority.
Economists, including Janet Yellen, Biden’s choice for treasury secretary, say additional help is needed to stop the bleeding before the federal government can try to rebuild the economy. Here are three reasons why:

1. The economy is getting worse

During the first week of the year, the number of new people applying for unemployment benefits rose above 900,000 for the first time since August. Claims dropped only slightly last week and remain at the highest level in months.
The U.S. economy declined by 9.8 million jobs compared to its pre-pandemic level. This is more work than was lost in 2008, after the financial crisis.

Although a majority of higher wage earners are expected to return to work by the summer, the unemployment rate for low wage earners remains stubbornly high.

According to Opportunity Insights, a project at Harvard University, nearly 25% of workers earning less than $ 27,000 a year are out of work. By comparison, the total unemployment rate is about 6.5%.

2. Things can get worse before they get better

The growing number of Covid cases and deaths, as well as renewed local closure measures, are making it harder for businesses to stay afloat.

The number of small businesses that are open and active is declining by almost 30% compared to pre-pandemic levels, which are still declining during the autumn.

The winter weather makes it harder for businesses like restaurants to lure customers to outdoor patios.

And economists warn that more jobs could be lost in the coming months, despite the start of the vaccine.

3. Traditional stimulus relief does not work during a pandemic

Traditional stimulus programs such as one-time direct payments or tax credits are not as effective if the recession is caused by a public health crisis, said John Friedman, a professor of economics at Brown University and co-director of Opportunity Insights.

People will still not go out to eat or spend money on other entertainment if they do not feel safe, no matter how much money is in their bank accounts – and this also means that they do not buy so many new ones. clothing or other items as it would otherwise be.

“Instead, we need to help those hardest hit by the pandemic get through the next six to nine months until this public health crisis passes. Then we can get the economy going again,” Friedman said.

He pointed to improved unemployment assistance, food stamp benefits and rental assistance as programs that can currently provide a stopover for people.

While Biden has already renewed eviction protection, he will need Congress to extend federal unemployment benefits and raise food stamps. He also called on lawmakers to provide money for childcare, restore emergency pay benefits, create new allowances for struggling small businesses and subsidize health insurance premiums for those who have lost their jobs.

Anneken Tappe of CNN contributed to this report.

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