Second stimulus check: what would a back-to-work bonus be?

For some the financial support laid out from the CARES Act seems like an eternity ago. As part of that, eligible individuals were issued $1,200 as well as being able to take advantage of various other unemployment benefits. We cover how this has all panned out in more detail in our piece: ‘Second stimulus check update: is another payment on the way?’

Back-to-work bonuses in place of stimulus checks

As we await the HEROES Act’s day in the Senate - a bill that may have passed the House of Representatives but has been declared ‘DOA’ by Republicans - another proposal is gaining traction from the GOP. The idea is to provide a package that gives bonuses to encourage people to return to work, rather than a further stimulus check (or the aforementioned unemployment benefits) which some believe can act as a disincentive to getting business going again.

According to Matt Weidinger, former deputy staff director of the House Committee on Ways and Means, and currently a Rowe Fellow in poverty studies at the American Enterprise Institute, speaking to CNBC, the back-to-work bonuses would “level the playing field” between those still working through the pandemic and those on benefits.

How the bonuses would be crafted is as yet unclear, although a number of suggestions have been put forward as states try to introduce their own plans. Governor Brad Little from Idaho, for example, set aside $100 million from which returning workers would receive a bonus of $1,200 (full-time) or $750 (part-time). In Texas, Senator Kevin Brady offers those who go back to work an extra two weeks of the $600 benefit, to go along with their normal salary. The other proposal, from Ohio Senator Rob Portman, would provide returners with a weekly payment of $450 until the end of July, when the CARES Act expires.

Criticism and the Trump administration

Critics of the proposal point to the health risk. We have already seen that as economies have started to open up, before being ready and at the behest of President Donald Trump, the number of coronavirus cases has increased. Putting a financial reward on the line for returning to work may be too much to resist for those most vulnerable, and the overall problem could be exacerbated. And for those that have, for example, childcare needs, it is unlikely to help in the current situation that they find themselves.

Trump and his administration appear to be in favour of a return-to-work type alternative to the stimulus checks in many of the Democrat proposals. Steve Mnuchin said recently that any package would be built around getting employment back on a positive footing, while Larry Kudlow, the White House economic adviser, suggested that those targeted would be those who had lost their jobs. He didn’t, however, rule out tax rebates or stimulus checks.

“The president is looking at a reform measure that would still provide some kind of bonus for returning to work, but it will not be as large and it will create an incentive to work,” Kudlow, director of the National Economic Council, Kudlow told CNN.

Now it is all about finding the right balance, but questions remain over who will tip the scales and who will benefit most.