In response to the coronavirus pandemic, the U.S. government passed the CARES Act, which included economic impact payments, or stimulus checks, for millions of Americans, and enhanced unemployment benefits of $600 per week.
Both measures were efforts by the federal government to get money in the hands of consumers quickly, and unlike in past economic recessions, that helped put money in the pockets of Americans. The stimulus checks and enhanced unemployment benefits contributed to the largest monthly increase in personal income in recorded United States history at a time when many experts were expecting to take a hit, incomewise.
But the additional $600 per week that qualified individuals receive from the federal government on top of their state unemployment benefits will stop as of July 31, 2020. Recipients will still get their regular state unemployment benefits; only the federal benefits passed as part of the CARES Act are expiring.
Video by Stephen Parkhurst
While some opponents of the unemployment benefits worry that extending them will disincentivize workers from returning to the labor pool, many experts also worry that ending the benefits too quickly could lead to more pain for individuals and the economy.
"These benefits are an automatic stabilizer that helps not only the unemployed, but the whole economy," Alan Blinder, former vice chair of the Federal Reserve and a professor of economics at Princeton University, told Grow. So refusing to extend the extra unemployment aid is "not only crazy economically, it's cruel on a humanitarian basis."
Several new stimulus proposals have been introduced, including a "back-to-work" bonus of several hundred dollars per week. However, currently none of these proposals have been signed into law.
Senate Republicans currently favor the idea of a "back-to-work" bonus instead of a sending out a second stimulus check or extending the enhanced unemployment benefits. Some have cited May's better-than-expected jobs report as evidence that the crisis is ending.
May's surprisingly positive job numbers — a record 2.5 million people were added to nonfarm payrolls — do indicate an easing of the crisis. But the U.S. also lost approximately 22 million jobs in March and April. This means that even in the unlikely event that the economy grows by 2.5 million jobs per month from here on out, it would still take about nine months to regain all the jobs that were lost. While many experts agree that the economy is recovering, continuing to add 2.5 million new jobs every month would be unprecedented.
At the moment, it seems unlikely that the enhanced unemployment benefits in their current form will make it into any new bill that's signed into law. If there's a second wave of the coronavirus in the fall, or if the pace of the economic recovery slows, though, Congress could feel pressure to reinstate unemployment benefits or send a second stimulus check after all.
Be sure to educate yourself on what unemployment and other benefits you may be eligible to receive. Some state governments have online calculators that will help you figure out what your unemployment benefits might be.
Create a budget based on those estimates so you know what to expect, and add to, or start, an emergency fund. Even if you're currently employed, 2020 has proven that anything is possible and that it's a good idea to be prepared.
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