The $600 Unemployment Controversy

Written by: CashAdvice Staff

The $600 unemployment benefit expected to vanish. It is most probable that the weekly $600 enhancement to unemployment will disappear by July 31st. With Democrats keen on extending the extra pay to next year, the Republicans, on the other hand, appear firm on their decision on blocking an extension.

Whats fascinating about this entire ordeal is the fact that lawmakers from both sides are floating other ideas. For instance, they are securing aid amounts to the unemployment rate or paying additional benefits to those who find work.

The controversy behind the $600 benefits

As a result of the current pandemic, the United States’ unemployment rates have soared to heights not seen since the great depression. To put it in numbers, since mid-March, close to forty-one million Americans have filed for unemployment.

As a result, the CARES Act was introduced. Sometime in late March, a $2.2 trillion coronavirus relief law was enacted to expand jobless benefits. One of the significant controversies behind these unemployment benefits is the percentage given to replace an average worker’s wage.

During regular times, the unemployment benefits administered by the state replace close to around 40% of an average worker’s wage. However, with the CASE Act implementation, the federal government will pay $600 a week as an unemployment benefit to a typical worker. The $600 a week in percentage fully replaces the wages of the average worker.

Also, some lawmakers criticize this unemployment benefit by terming it a deterrent to returning to work. Nevertheless, this has not deterred Democrats from airing the view. They continue advocating for an extension with the notion that this payment is a lifeline for many Americans. They have moved a step further by passing a bill last month that will probably extend the benefit into 2021.

Although the Democrats are pushing hard to extend the current $6000 weekly unemployment benefits, labor experts argue that the extension of the policy is highly unlikely. Instead, a sort of emergency benefit will take its place. These labor experts are forecasting that the unemployment rates are likely to remain high in the foreseeable future.

Additionally, according to them, finding a job will not be an easy task in the foreseeable future. The labor experts are not alone on this, as the Congressional Budget Office projects that unemployment rates in the fourth quarter of this year will be 11.7%. Although these numbers may seem high or rather are still higher than any quarter recorded since the great depression, at least they are lower than those recorded in April, where the numbers were 14.7%.

Automatic triggers

The duration or amount of unemployment aid to economic conditions would be tied by one policy approach. For instance, the Worker Relief and Security Act proposed by the Democrats is a good and clear example. Look at it this way; the structure reduces aids as the health crisis regresses and, in turn, state rates of unemployment improves.

Additionally, all unemployed individuals would continue to receive the weekly $600 allotment during state and national emergencies related to the coronavirus. Upon the official conclusion of the health emergency, the weekly wage would gradually fall.

For instance, in states where unemployment rates are over 7.5% out of work, individuals would get a weekly allotment of $450. The $450 a week allotment would continue for around thirteen weeks, after which it will be reduced to $300 a week. To be clear, the assistance would continue if the unemployment situation did not change.

For states where unemployment rates are less than 7.5%, jobless workers would receive wages of $350 a week. The $350 a week assistance would continue for another thirteen weeks, after which it would reduce to $200 a week. The $200 a week allotment would continue until the unemployment rates dropped below 5.5%.

The authors of this proposal are Sen. Michael Bennet, D-Colo., Sen. Jack Reed, D-RI., and Rep. Don Beyer, D-Va.

Employment bonus

To encourage unemployed Americans to seek new jobs, right-leaning legislators are using the idea of an employment bonus. Sen. Rob Portman, R-Ohio, sent a proposal that stated that individuals who returned to work would receive an extra $450 a week.

The proposed $450 a week employment bonus would continue up to the same date on which the unemployment bonus was scheduled to stop. The subsidy in the wages is meant to discourage any workers who collect the unemployment benefits who see it as a financial incentive.

According to an Evercore ISI economist Ernie Tedeschi, Republicans are discussing another idea that would pay benefits in a swelling amount of money as a substitute for weekly checks. For instance, rather than paying the $600 weekly bonus for ten consecutive weeks, the legislators would pay $6,000 upfront.

According to Tedeschi, the lack of the $600 a week would push jobless individuals to try and look for work. Besides, the tone of cash would help them as they hustle for work.


Like with anything else, there are sticking points with both of these approaches. According to Mr. Tedeschi, given the uncertainties around the duration of the health crisis and its economic damage persist, tying assistance levels to situations such as unemployment rates is a step close to conquering the pandemic.

However, conservatives may fight the approach stating that unemployment rates are not likely to recoil unless unemployment assistance is reduced. According to experts, the problem with the bonus approach is the end date. They argue that the due date on the aid may not correspond with an improvement in the economy.

In Mr. Tedeschi’s view, the problem with Portman’s proposal is that the approach assumes that jobs will be readily available as from July 31. Given the continued social distancing measures and the possibility that many business have closed the office for good, this seems more unlikely.

Additionally, this approach could, in the long-term, suppress economic recovery. If unemployed individuals are to take the first job that comes along and people’s interests and skills are not aligned with those jobs, it could prove to be a long-term problem.


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