Advocates say the plan will be especially helpful for small businesses that have had trouble getting employees to return, while critics say it would expose lower-income Americans to bigger risks from the pandemic.
“I worry that a back-to-work bonus is a bribe to take a lousy, unsafe job,” said Bernstein. Still, he acknowledged that the proposal would address the incentive question.
‘Self-Fulfilling’
Congress landed on the $600 figure because together with state benefits, it added up to the average weekly wage -- so anyone earning that amount would see their full income replaced if they got laid off.
But in fact, job losses have been concentrated among Americans on below-average wages. As a result, about two-thirds of those eligible for the beefed-up unemployment payments will be collecting more in benefits than they earned while working, according to a study by University of Chicago economists.
Ron Wyden, the top Democrat on the Senate Finance Committee, is calling for a gradual reduction of the payouts. Under his plan, the federal top-up would stay at $600 until unemployment in a given state drops below 11% -- and then decline by $100 for each percentage point that the jobless rate falls, until it’s phased out completely.
Kyle Pomerleau, resident fellow at the conservative American Enterprise Institute, says that idea has the merit of avoiding arbitrary cutoffs while unemployment is still elevated. Still, he worries that “if the benefit is high enough, it becomes a self-fulfilling prophecy -- if people are staying home, and then you never actually hit the threshold to start winding it down.”
‘Not a Myth’
Neither Portman nor Wyden have released estimates of the cost of their plans, which would be tough to arrive at anyway amid so many unknowns. But even if their precise numbers don’t survive weeks of bargaining, the ideas behind the two proposals –- tapering jobless benefits, and shifting some of them to the newly re-employed -- may feed into whatever compromise emerges.
Senator John Thune, the No. 2 Republican in the chamber, said talks on the next package will take into account an extension of some unemployment benefits, as well as incentives for employees who go back to work, when they get under way this month.
Lawmakers shouldn’t be making policy in the expectation of a quick rebound in job markets, according to Wayne Vroman, a labor economist at the Urban Institute.
“It’ll be a long time until the U.S. gets back to single-digit unemployment,” he said. And meanwhile, “unemployment insurance is the only income for people who have been laid off. The anti-poverty effectiveness of it is not a myth.”
This article was provided by Bloomberg News.