Trump wants to replace unemployment benefits with salary bonuses
Trump administration wants to end unemployment benefits and replace them with other social policies.
Federal Coronavirus Pandemic Relief Act passed in March allowed unemployed Americans to receive $ 600 a week in addition to unemployment benefits.
These payments are slated for completion after July 31, which could result in a dramatic reduction in cash flow for the approximately 30 million people currently receiving the benefit..
The unemployment rate was higher in April and May than at any other time since the Great Depression..
Presidential Administration Donald Trump, like many Republicans in Congress, wants the $ 600 payout to end. According to Larry Kudlow, economic adviser to the White House, the administration believes that the policy does not provide Americans with an incentive to return to their previous jobs or find a new one..
The administration supports the replacement of extended benefits, which are paid on top of traditional government-level benefits, with a cash bonus that encourages people to return to work.
«President is considering reform measures that will still provide some sort of return to work bonus, but they will not be as big and it will create incentive to work», – National Economic Council director Kudlow told CNN on Sunday.
While Kudlow did not elaborate on a specific form of return-to-work bonus, several existing proposals hint at what such a policy might look like..
According to one of them, voiced by a senator Rob Portman from Ohio, it is proposed to replace $ 600 weekly checks with temporary payments of $ 450 per week for those returning to work. Thus, employees will receive plus $ 450 in wages..
Economic impact of Trump’s executive orders on unemployment benefits remain unclear
Another proposal from a Rep. Kevin Brady from Texas would allow workers who accepted a job offer to keep a two-week unemployment benefit of $ 600. Usually, if someone finds a job, he loses unemployment benefits. According to Brady, this concept is comparable to «hiring bonus of $ 1200».
However, in their current form, Portman and Brady’s policies have an end date of July 31 – the same expiry date as the $ 600 a week benefits..
Democrats, for their part, want to extend the increase in the timing of unemployment benefits. They are considering a financial aid bill that will extend $ 600 benefits until early next year.
Some Democrats have also proposed phasing out aid, tying it to economic indicators such as the state’s unemployment rate. In other words, weekly benefits will decrease as the state’s unemployment rate drops..
According to Ernie Tedeschi, economist Evercore ISI, legislators are likely to compromise and leave extended unemployment benefits in some form after July to avoid falling household incomes for millions of Americans.
States typically reimburse 30% to 50% of previous wages, Tedeschi said. The $ 600 a week hike was geared towards a full wage replacement for the average worker who makes about $ 1,000 a week..
Republican proposals sparked unexpected addition of 2.5 million jobs to the US economy in May against an expected loss of about 7.5 million.
States are beginning to reopen their economies, and many businesses that have received wage protection loans have hired workers to fulfill the condition of receiving this federal aid..
«This is a turning point in the economy, Kudlow said. – In addition to the large number of jobs, you have many positive indicators. We don’t want to interrupt this [by increasing unemployment benefits]».
However, critics say it is naive to believe that all Americans who have lost their jobs since mid-March will be able to return to work by the end of July..
Twenty one million people are still unemployed. It will take another nine months for job growth similar to those seen in May to return to employment levels in February.
If enhanced unemployment assistance ends, which may coincide with businesses running out of credit money and households running out of the one-off incentives received. Americans could cut spending significantly, triggering new job losses, economists say.
Have Ioana Marinescu, Professor of Economics at the University of Pennsylvania, there is a political idea that combines democratic and republican ideals. She offers her perspective on what a potential compromise might look like..
She advises paying $ 600 a week to workers who have lost their jobs in about four months, whether they remain unemployed or find new jobs..
This «lost jobs incentive program» will keep unemployment benefits unchanged during a fragile economic recovery, as well as remove any perceived disruptions to work caused by rising unemployment benefits.
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