Unemployment benefit: that’s what the Democrats want in an economic stimulus package
President Joe Biden speaks as he meets with senators from both parties at the White House on February 11, 2021.
Doug Mills-Pool / Getty Images
More unemployment benefits could be on the way as Democrats and the Biden government pursue a $ 1.9 trillion pandemic relief package.
The legislation would increase the number of unemployment benefits workers receive per week and extend it for several months.
House Speaker Nancy Pelosi, D-Calif., Expects a bill to be signed by mid-March. Democrats want to pass legislation with a budget measure that doesn’t require Republican support.
The exact amount and duration of the benefits is somewhat uncertain.
Based on various suggestions, Democrats are likely to increase benefits by at least $ 400 per week and, according to labor experts, extend them through at least August.
The added benefits of the $ 900 billion aid package that former President Donald Trump signed in late December is currently set to end after mid-March for some workers and after April 11 for others. Without further relief, 11 million unemployed would lose their income support.
Proposals from Biden and Democrats
President Joe Biden proposed increasing unemployment benefits by $ 400 per week, bringing the total payout for the average worker to about $ 739 per week, according to the Department of Labor. He would also extend the benefits until September.
A draft proposal released this week by the House Ways and Means Committee largely reflected Biden’s plan. However, the benefits would end on August 29.
More from Personal Finance:
IRS: No plans to extend tax filing past April 15th
Meet the borrowers who refuse to pay their debts
You went broke in the Great Recession. Now, in the 80s, the pandemic took off
The $ 400 weekly subsidy would begin after March 14, according to the House proposal. It would essentially go up if the current $ 300 weekly surcharge ended, meaning there would be no retroactive payments at the start of the year.
However, Senator Ron Wyden, D-Ore., Chairman of the Senate Finance Committee, is pushing for a larger $ 600 per week subsidy.
“I’m going to fight like hell to get six,” said Wyden this week.
$ 400 or $ 600?
Republicans have been strongly opposed to a weekly performance boost of $ 600 since the beginning of the pandemic. The CARES bill offered a $ 600 surcharge for about four months through July.
Greater benefits would deter people from returning to work, they argued, increasing the unemployment rate and dampening economic recovery.
Many studies found that the $ 600 surcharge for the spring and summer all together did not lead to this. Employment has likely increased during this period, according to an article published Wednesday by University of Chicago economists.
Senator Ron Wyden, D-Ore., Wants to increase unemployment benefits by $ 600 a week.
Andrew Harnik-Pool / Getty Images
The economy has improved since then, which means that, according to some economists, improved performance may be a greater incentive for workers not to return to work.
“I think there is good reason to believe that the chilling effect will be greater in 2021 than it will be in 2020,” said Peter Ganong, an economist and assistant professor at the University of Chicago.
“But I absolutely think there should be [another unemployment supplement] in 2021, “he added, due to the ongoing hardship in the job market. The benefits should expire as more Americans are vaccinated, he said.
Democrats don’t necessarily need Republican votes for a stimulus package because they want to get it passed through a budget maneuver called reconciliation, which only requires a simple majority to be successful.
This plan could be complicated by the House Democrats’ intention to add a minimum wage of $ 15 an hour to the rescue package. Senator Joe Manchin, DW.V., has spoken out against this proposal, and a Democratic defector could lower the bill’s chances.
“I think it’s more of a problem for the Senate to swallow this,” said Wayne Vroman, labor economist at the Urban Institute, a left-wing think tank.
Congress should take the side of extending benefits for a longer than shorter period to avoid the need for any further possible extension.
“Whatever the end point, trying to get Conservative Democrats to give even more momentum is going to be a lot more difficult in my opinion than it seems this time around,” Vroman said.
Do you have an unemployment story you’d like to share with CNBC? Please send an email to [email protected]