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Here's how Congress may help the unemployed in the new relief bill

Posted July 22, 2020 7:03 a.m. EDT
Updated July 22, 2020 7:48 a.m. EDT

— The clock is ticking on the $600 weekly boost to unemployment benefits, but Congress is still divided over how to help the millions of Americans who remain out of work.

The federal enhancement, part of the $2 trillion coronavirus relief package passed in late March, expires after this week. An estimated 25 million Americans are receiving the extra payments -- on top of their state unemployment benefits -- and it's pumping an additional $15 billion into the economy, according to one estimate.

The jobless say they are depending on the bigger checks to pay their rent, buy medication and put food on the table for themselves and their families. State benefits typically replace only 40% of wages. Plus, they argue, there are few jobs to be had as the nation contends with another surge in coronavirus cases.

But businesses are worried that they are having trouble bringing workers back because the Congressional boost pays many recipients more than they made while employed.

One of the biggest unknowns? Where the economy is going to be a few months from now, which is what lawmakers have to place bets on.

"There's a danger of setting unemployment benefits too low in an environment where the economy is doing very badly," said Joseph Vavra, an economics professor at the University of Chicago. "The argument for high unemployment benefits becomes less compelling the more healthy the economy is."

Here's what's on the table:

Continuing the $600 federal benefit into next year

Democrats say the economy is still weak and American families still need help to get by. Although more than 7 million jobs were added in May and June, some 18 million people remained unemployed last month. And more than a million people are still filing first-time unemployment benefits each week.

The House Heroes Act, which passed the chamber in May, would extend the $600 benefit until January 31. But it would allow those already receiving the supplement by that date to continue collecting it until the end of March.

Reducing the enhanced weekly benefit

While some Senate Republicans want to eliminate the $600 boost completely, many realize that that's not likely to happen.

So they are also contemplating reducing the size of the weekly boost. But keep in mind that a $300 enhancement would mean that 42% of the jobless would make more on unemployment than they did at work, according to Vavra's estimate.

Currently, about two-thirds of the jobless are making more on unemployment with the $600 boost than they did in wages.

However, the unemployed can't just turn down offers to return to work. They risk losing their payments completely unless they meet the criteria to qualify for special pandemic assistance for those directly affected by the outbreak.

Providing a bonus to return to work

Republicans are more enthused by a return to work bonus, which has been floated by Ohio Sen. Rob Portman and Texas Rep. Kevin Brady, ranking member of the House Ways & Means Committee. The Brady proposal calls for providing up to $1,200 to workers who accept a job offer.

Idaho, which recently implemented a similar plan, last week said that nearly 2,000 businesses have sought more than 10,000 bonuses for their employees on the program's first day.

Some Republicans are looking to combine a return to work bonus with a smaller enhanced jobless benefit.

Offering both would provide the jobless with income they need and would mitigate disincentives to work, said Douglas Holtz-Eakin, president of the American Action Forum, a center-right policy institute.

"It's really going to be the package that matters," he said.

Instituting a payroll tax cut

President Donald Trump is pushing for a payroll tax cut, as he has been for months. It would provide more money to workers by reducing the amount taken out of their paychecks to fund programs such as Social Security and Medicare.

But this wouldn't help the millions of Americans who are unemployed, who are the focus of lawmakers' attention right now.

A growing number of Republicans and most Democrats don't support such a measure, although it remains a White House priority.

Tying a benefits boost to the unemployment rate

Senate Democratic Leader Chuck Schumer of New York and Sen. Ron Wyden, an Oregon Democrat, recently introduced a bill that would base enhanced benefits on a state's unemployment rate.

The jobless would continue to receive $600 as long as a state's three-month average unemployment rate remains above 11%. The supplement would be reduced by $100 for every percentage point decrease in the rate, until it falls below 6%.

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