When Congress created the $600 per week unemployment bonus in the CARES Act, it appropriately set an expiration date of July 31. The largest bonus in the history of the program (by several hundreds of dollars) was only intended to be available in the short term, as millions were laid off and we entered the early, uncertain phase of the COVID-19 pandemic.
That bonus has done a predictably devastating amount of damage, but now some liberals in Congress would like to extend the handout for at least another six months, even as employment numbers are rising and the economy is reopening. Republicans in Congress and the Trump administration need to hold strong and let this bonus expire on time.
Since the beginning, the virus strategy has been to “flatten the curve” by encouraging workers to stay home. The $600 bonus was compensation for the consequences of that effort. Thankfully, few of our hospitals saw their capacity limits truly threatened. But while we have not lately seen the kind of effects from the virus that we saw earlier this year, businesses have taken a nosedive. As desperate businesses try to hire back workers, their employees refuse to come back because they can actually make more by remaining in government dependency.
This isn’t fair for people who are making the right decision to return to their jobs, or those who continued to work because they were “essential” employees. Moreover, it is fraudulent to continue receiving benefits when you can and should be working and a monumental bureaucracy, marred by excessive paperwork, makes it nearly impossible for employers to report these workers and do anything about it.
The $600 unemployment bonus has created a social divide between those who work and those who do not work, and resentment is building. Essential workers have been on the front lines, and often for less pay than their neighbors are getting on unemployment. The average unemployment benefit is now equivalent to roughly a $50,000 per year salary. That means more than two-thirds of people on unemployment are making more than they would working in their normal jobs. You read that correctly.
It’s logical that some would want to take advantage of that. After all, Congress has made it more lucrative to stay at home and collect unemployment than to work. Workers stand to lose hundreds if they go back to their normal jobs. Without ending this bonus, this damage could become permanent. What happens if, as workers prefer to be laid off rather than to be on the job, the jobs disappear?
It’s not that far off. From restaurants in New York to furniture stores in Tennessee, we’re already seeing this play out. It’s even happening in my home state of Arkansas. In April, a pine mill just half an hour from my front door was set to lay off 200 workers, partly because the workers themselves preferred to make more money on unemployment rather than work for their usual pay.
About 65% of small businesses are worried their employees will not return. They simply cannot compete with a $600 non-productivity bonus and could be on the hook for the cost of unemployment if they cannot hire their workers back. We do a disservice to small business owners by overlooking policies to encourage growth and prosperity. We have already lost 140,000 small businesses due to the shutdowns. We cannot afford to lose more just as they’re able to start reopening.
Congress should resist calls to extend the unemployment bonus, and states should safely reopen their economies while protecting public health so that the American economy can roar back to life. That would help countless millions once again experience the American dream.
Nick Stehle is the vice president of communications at the Foundation for Government Accountability.