Unemployment benefits: how many jobs could be saved?

As winter sets in and covid-19 cases surge throughout the US, millions of Americans find themselves unemployed. Extending the unemployment benefits of the kind put in place at the beginning of the pandemic could save over 5 million jobs according to a recent report by the Economic Policy Institute.

In March as the coronavirus pandemic began to take its toll on the US economy Congress put in place financial stimulus packages. Included was relief for the 22 million Americans who found themselves out of work as businesses furloughed and laid off workers. Those programs and subsequent executive actions are due to expire at the end of December.

The Economic Policy Institute recommends more unemployment benefits

The CARES Act passed in March provided expanded unemployment insurance for Americans affected by the adverse economic situation and were beneficial in helping to keep Americans financially afloat. They included:

These programs will expire on 26 December ending a valuable lifeline to Americans choosing which bills to pay or expenses they can afford. Food banks around the US are experiencing a surge in demand as areas of the country once again shutter businesses. According to the Century Foundation 12 million Americans will be on either PUA or PEUC when the programs expire, with another 4.4 million who have already exhausted their benefits.

The report argues that if nothing is done that the US could experience a situation similar to the Great Recession when long-term unemployment rose to 40 percent of total unemployment for three years. In October the long-term unemployment rate, those who have been unemployed for more than 27 weeks, was 32 percent.

According to the EPI report the economy would increase by 3.5 percent or an income gain of $441 billion if the programs’ effectiveness were maintained through 2021, and if the virus were brought under control so the economy can grow naturally. It would also mean 5.1 million more jobs created in 2021. At the moment the economy is still 10 million jobs below the pre-pandemic level and job creation is slowing.

What plans have been presented on Capitol Hill?

The best hope for any new relief being passed will come next week as Congress needs to pass a spending bill before 11 December to avert a government shutdown. Last week a bipartisan group of moderate Senators put forth a $908 billion plan that would provide $300 in additional jobless benefits through March. As well as funding for state and local governments to keep front line workers from losing their jobs.

Republican Senate Majority Leader Mitch McConnell has proposed his own bill a revised version of the $500 billion package he has been pushing for months. It includes extending unemployment benefits for just one month then phasing them out over two months.  But it does not allow for new applicants after the month-long extension and does not include any additional weekly supplement.

House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer had been working to get a much bigger deal through that the House had passed in October. The bill included a $600 weekly supplement to state unemployment benefits but it never got a hearing in the Senate. They have called on McConnell to pass the bipartisan bill with the hopes of getting more relief through in the new year when President-elect Joe Biden is in the White House.

Biden has been in favor of extending the $600 weekly top-up to state benefits and has said that he will work with Congress to get a bill passed.