Experts expect 'massive human suffering' if GOP lets jobless benefit expire

Economists are sounding the alarm about the upcoming expiration of a $600 weekly unemployment insurance boost that Congress passed in reaction to millions of lost jobs resulting from the coronavirus pandemic. They warn that letting the extra benefit run out will lead to more suffering, including the possible loss of millions more jobs.

The $600 weekly benefit is currently slated to expire on July 31. Democratic lawmakers have been pushing for months to extend the payments through the end of the year; House Democrats included such an extension in the virus response bill they passed on May 15.

But Senate Majority Leader Mitch McConnell has refused to take up the bill, in part because he and other Republicans — including Donald Trump — object to extending the payments.

“July the 31st is when this expires, and I promise you, over our dead bodies this will get reauthorized,” Sen. Lindsey Graham (R-SC) said back in April.

Heidi Shierholz, a senior economist and director of policy at the Economic Policy Institute, said in an interview that the added unemployment payments have helped stave off even worse economic impacts of the coronavirus, which has already led to tens of millions of Americans losing their jobs. Ending it now would not only cause “massive human suffering” for the workers who will have that vital source of income shut off, Shierholz noted, but could also have the added consequence of causing 5.1 million more jobs to be lost.

“That $600 allows unemployed people to go about their regular lives and to spend money and buy goods and services,” Shierholz said. “And if those $600 are taken way, those unemployed people won’t be able to buy those goods, and the people who produce those goods and services will lose their jobs.”

Republicans have opposed the additional unemployment benefit from the get-go, claiming the payments are causing unemployed Americans not to look for work.

Graham, along with Sens. Tim Scott (SC) and Ben Sasse (NE), even tried to block the $600 boost when the Senate was first voting on the coronavirus relief bill, saying it was wrong that some of the lowest-income workers would actually earn more in unemployment than they did from their salaries when they worked. All but two GOP senators voted to strip the added unemployment benefit from the bill in March, though their effort failed.

But Shierholz said data doesn’t bear out the GOP claim that the added benefits are discouraging workers from seeking employment.

“The people who talk about the huge disincentive effect are ignoring the realities of working people in this country,” Shierholz said. “If you are offered a permanent job right now, and you know that this country is going to be in a period of high unemployment for a very long time, that job is incredibly valuable to your family. And the idea that you’d trade that for a temporary boost in unemployment — it denies the reality that working people face.”

Other economists have said the weekly unemployment boost was the most effective piece of the coronavirus recovery, even more effective than direct payments to workers who met a specific income threshold.

“Direct relief to unemployed workers is an effective form of economic stimulus, especially because the low-wage workers most exposed to the coronavirus also have the highest propensity to consume — meaning they return more relief dollars back into the economy compared to wealthy households,” three Brookings Institution economists wrote in an op-ed published on July 8 by CNN. “People still need to pay rent and buy groceries, and an extra $600 in their pockets keeps money circulating in the economy better than more convoluted solutions.”

Ultimately, as the expiration date fast approaches, Republicans are appearing more open to extending the benefit, but have suggested reducing the amount of the payments to either $200 or $400 a week and adding another round of direct payments to workers, the Washington Post reported on Tuesday.

And while Shierholz said that those measures are better than nothing, she said there will still be suffering, given that the $600 payment was crafted to compensate the average worker for the salary they made before they were laid off.

She added that the direct payments are an inefficient use of government dollars, as many of the payments will go to people who are currently working and may not need to spend the money immediately, leading them to save the funds rather than put them back into the economy.

And even if Senate Republicans agree to extend the benefit, McConnell’s timeline for voting on the bill would lead to a gap in payments, Politico reported.

“The House passed a bill to extend unemployment benefits months ago, but Mitch McConnell blocked it,” Rep. Don Beyer (D-VA) tweeted. “He just said the Senate will do nothing until next week — which would cause a lapse. Millions of American families are set to begin August with a huge loss of income as a result.”

Published with permission of The American Independent Foundation.