Enhanced unemployment benefits included in the $ 1.9 billion package of pandemic relief signed by President Biden on Thursday could keep billions of dollars a week from letting the economy flow through the summer.
The plan expands two pandemic-related programs and extends the additional payments of $ 300 to all layoffs who receive unemployment benefits until early September – far after the effect of $ 1400 checks for individuals is likely to fade. About 20 million people took advantage of the unemployment benefits in mid-February, up from 2 million a year earlier, which added more than $ 10 billion in additional incentives per week.
Some economists believe that extending extra unemployment benefits for nearly 18 months is a deterrent for some people to return to work, preventing industries such as logistics, construction and certain retailers from finding workers if the economy recovers.
According to other economists, the payments boosted low-income families, who lost excessive jobs in the coronavirus pandemic while driving money back into the wider economy. According to the Department of Labor, the U.S. had 9.5 million fewer jobs in February than a year earlier.
“Things are improving, but we still have a huge gap,” said Heidi Shierholz, a Ph.D. economist at the Economic Policy Institute who served in the Obama administration. “Unemployment benefits will help make it very difficult for people through the next few months,” she said.
The law allows unemployed workers, including the self-employed and others who are not normally eligible for any benefits, to seek unemployment benefits until 6 September. With the $ 300 per week improvement, the average weekly unemployment benefit for those who qualify through regular government programs is about $ 620 a week, according to the Department of Labor, which is about the equivalent of full-time work at $ 15.50 an hour.
A person who has received the average benefits since March last year would have paid about $ 30,000 in the past year. With the expansion, the person can receive about $ 15,000 more.
Economists expect economic stimulus and a mitigating pandemic to boost economic growth to nearly 6%, which would be the fastest pace in nearly 40 years. However, extra spending in recent years has caused federal deficits to skyrocket and increase inflation.
At the end of January, there were 6.9 million vacancies in the U.S., the Department of Labor said Thursday, slightly less than a year earlier, just before the pandemic took hold. But there is more work available in some fields.
The job search website Indeed.com said there were nearly 40% more openings in manufacturing and warehouse-type work by the end of February, compared to a year earlier. Pharmacies and construction openings increased by more than 30%.
President Biden signed the $ 1.9 billion Covid-19 bill into law, giving Americans an economic boost. Gerald F. Seib, WSJ, outlines what is in the bill and why it is important to the Biden government. Photo illustration: Laura Kammermann
Extensive benefits create a barrier to hiring employers in those industries, said Marianne Wanamaker, a doctor. labor economist at the University of Tennessee who served in the Trump administration.
“By making it easier for people, it is possible to increase their ability to return to the workforce,” she says. “And we know the longer people don’t work, the more they struggle to get back.”
Those who have been out of work for a year or more can see skills atrophy and get a stigma in their resume. They have also made life adjustments, such as moving in with family members, which can lead to them dropping out of the workforce, Dr. Wanamaker said. “A disparity between the supply of labor and demand is a recipe for higher inflation and slower economic growth,” she said.
Recent guidance from the Department of Labor makes it possible for some workers to refuse job offers and stay on benefits if they feel the workplace is unsafe. Dismissed workers usually have to actively seek employment to receive unemployment benefits. Some people did not start job searches again because their children’s schools were not reopened, or if they were worried about getting sick.
Dr. Shierholz said most people prefer to have permanent jobs rather than hold temporary unemployment benefits that will end by September. “And if people take a little longer to get a job, it can be a good thing for them and the economy,” she said. “They can find a job that matches their skills and interests, where they can be more productive and probably pay more.”
Some employers believe the $ 300 improvement offered this year is more manageable than the extra $ 600 in weekly payments included in the initial government aid package adopted by Congress and signed last year by former President Donald Trump. These payments ended in July 2020.
A handful of workers at Hoffman Car Wash locations in Albany, NY, asked not to be recalled last year because their unemployment benefits paid more than they earned to clean cars, said Tom Hoffman Jr., owner said. same problem, and that he was recently able to find the workers he needed.
He said his business will continue from 2019 because people drive less and that some customers are reluctant to clean their vehicle interiors, the most labor-intensive service.
“I think the $ 300 is useful for people who are out of work,” he said. “It does not offer nearly as much discouraging value as the $ 600 we saw last year.”
Write to Eric Morath by [email protected]
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