A new proposal would pay you a $1,200 bonus to go back to work


You may be one of the millions of Americans who received a $1,200 stimulus check, thanks to the $2.2 trillion CARES Act. And you may still be hurting financially, well over two months after the first stimulus package was passed. 

A one-time payout wasn't enough for many Americans trying to make ends meet as unemployment skyrocketed and the U.S. economy slipped into a recession in February, especially if you had been living paycheck-to-paycheck and were trying to cover necessities like food and rent. 

A new bill currently under consideration in the House of Representatives includes a sizable financial bonus that could be a boon for Americans, as restrictions ease and economies reopen around the country. Like the $450-a-week "return to work" bonus floated by Ohio Senator Rob Portman, The Reopening America by Supporting Workers and Businesses Act of 2020 would give unemployed Americans a bonus worth $1,200 for getting back into the workforce. 

"Quarantine is a forced hibernation, and this bill is almost like coaxing consumers to get out of the den early," says economist Lincoln Merrihew.  

Here's what you need to know about the the back-to-work bonus currently under consideration in Congress. 

'More money in the pockets of Jane and Joe Consumer'

The bill, unveiled on June 1 by Rep. Kevin Brady (R-Texas), on the House Ways and Means Committee, would not determine payouts based on household earnings the way the CARES Act did by using recent tax filings. Instead, unemployed Americans reentering the workforce would receive two additional weeks of the $600 enhanced unemployment benefits, which would amount to a $1,200 hiring bonus.

Americans would be eligible until July 31, when extended unemployment benefits are set to expire. 

It "would allow workers to keep up to two weeks of unemployment benefits if they accept a job offer," Brady said in a statement, adding, "This proposal is an important part in preventing a prolonged recession."

Those supporting the bill say it would help local businesses rebuild their workforce by turning unemployment benefits into a back-to-work bonus and help people "come off the unemployment ranks potentially sooner," explains Merrihew. 

"In other words, if you get people back into the workforce, and America is back 'online' sooner, that could have a cascade effect, bringing back the economy faster," he adds. 

Quarantine is a forced hibernation, and this bill is almost like coaxing consumers to get out of the den early.  
Lincoln Merrihew

The bill could "help Main Street get back to work," says Merrihew, but it's also about putting "more money in the pockets of Jane and Joe Consumer." Ordinary Americans need to get comfortable spending again in order for the economy to fully rebound and, economists say, a cash infusion like this could help. 

More than 40 million people have filed for unemployment benefits since the pandemic began. Of those, nearly 70% of workers who are receiving enhanced unemployment benefits could actually be receiving more income than they were from their paychecks, according to an analysis from economists at the University of Chicago. 

The bill would also incentivize workers who may feel hesitant to return to their jobs for a variety of reasons, including "health concerns, limited access to child care, and generous unemployment insurance benefits," according to a recent Federal Reserve report.  

Given these hesitations, the bill could have an important psychological effect: It could provide people with a sense of "security," says Merrihew. 

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Video by David Fang 

'It's designed to help the people who are hurt the most'

Experts say that the bill may have a tough time getting through Congress without some modifications. It doesn't account for the millions of workers who are still employed but have experienced a loss in income or incurred new expenses due of Covid-19. The bill also doesn't cover those who lost their jobs and filed for unemployment benefits but were never approved for them. 

"It's designed to help the people who are hurt the most," says Merrihew. "But the people in the middle ground, the people who are not fully employed, and not fully laid off, kind of working half speed, they may be the ones who end up in the toughest spot, finally." 

A Pew survey from May found that 3 out of 10 Americans either lost their job or had to take a pay cut because of the pandemic, with millennials and people of color being hit the hardest. But not all of those jobs are coming back in a post-Covid economy, warns Merrihew: "If you were let go from a job because the business is struggling and getting unemployment benefits, if that company no longer exists, this extra hiring bonus won't help you really, unless you find a new job."  

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People 'ultimately want to go back to work'   

For those who who have filed jobless claims and are making ends meet by cobbling together unemployment benefits and savings, an incentive to get back to work might be both a financial and psychological relief. People might take comfort in seeing others get back to work after months of restrictions and uncertainty, assuming employers are taking proper safety precautions.

Usually a recession is caused by some fundamental structural issue, such as when banks collapsed during the banking crisis, says Merrihew. In this case, the economic collapse was due to a virus, or a nonstructural restriction, meaning that "coming out of it is going to be very different as well." 

This bonus "is clearly geared to get people back right now," says Merrihew. "Psychologically, people love an extended vacation, but they ultimately want to go back to work." 

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