While Americans wait to see if members of Congress will be sending a second stimulus check their way, many are also concerned that the extra $600 per week in enhanced unemployment benefits is set to expire at the end of July.
The HEROES Act, which is the latest attempt at another massive federal stimulus package, made it through the House and was sent to the Senate on May 15. The act would extend that benefit until January, as well as offer another round of stimulus checks of up to $6,000 in additional support for each household, but the bill has stalled in the Senate.
Senate Republicans are concerned about the overall cost of the HEROES Act, which would provide roughly $3 trillion in additional stimulus measures to households and business, and they worry that extending the extra $600 per week in enhanced unemployment benefits could act as a disincentive for people to return to work, even as states open up.
Many Americans are hesitant to return to their jobs, according to a recent Federal Reserve report, because of "health concerns, limited access to childcare, and generous unemployment insurance benefits."
So some Republicans are suggesting that instead of continuing the increased unemployment benefits, the government could give out a "return-to-work" bonus of up to $450 a week for people who are willing to head back to their jobs. Reportedly, the White House is supportive of the plan.
The idea of a "return-to-work" bonus was first floated a few weeks ago by Ohio Senator Rob Portman as an incentive for people to go back to their jobs without having to worry about giving up the surplus money they might have been receiving on unemployment.
The bonus would more or less supplant the enhanced unemployment benefit and allow workers not to have to worry about potentially missing out on extra cash. The plan says workers would receive the weekly bonus until July 31, when the enhanced unemployment benefits are set to expire, according to a press release on his website.
Video by David Fang
Among the more than 40 million people who filed for unemployment benefits since the pandemic began, 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. So, by offering workers $450 on top of their wages, workers should still receive extra income while at the same time helping the economy rebound.
"If you are making $50,000 a year, it is more advantageous to be on unemployment insurance than it is to go back to work," Portman said on CNBC's "Squawk Box" in mid-May. He dismissed the idea of the HEROES Act extending enhanced benefits: "That's an example in this legislation of something that's going to hurt, not help the economy."
Portman's counterproposal could, under the right circumstances, win over key backers.
There are a couple of reasons that the "return-to-work" bonus is getting good buzz. It may be able to find support with Democrats in the House and Senate, who want to make sure workers are still getting some of the direct assistance they need from the government, even though this bonus would offer less than the $600-per-week benefit people would get on continued enhanced unemployment.
President Trump appears to support the idea, too. "We've got to reward individuals for coming back to work," so a back-to-work bonus is "something we're looking at very carefully," National Economic Council Director Larry Kudlow told Fox Business this week. "Senator Portman has a good idea; he understands incentives and disincentives."
Video by Jason Armesto
Republican support — and support from the White House in particular — is going to be the key to getting another stimulus bill passed, which could mean bonuses, extended unemployment benefits, and additional stimulus checks for households. Though the HEROES Act includes some of those measures, Republicans have been adamant that the bill will not pass the Senate as is.
But if Democrats and Republicans can find a compromise, possibly by giving bonuses to workers in lieu of continuing the enhanced unemployment benefits, there's a better chance that another stimulus bill could pass both houses of Congress and be signed into law.
And it's becoming increasingly clear that many Americans need more government help. Federal Reserve Chair Jerome H. Powell made that clear earlier this month when he said the economy could suffer "lasting damage" from the pandemic if the government doesn't take action.
"Additional fiscal support could be costly," he said at a Peterson Institute for International Economics virtual event, "but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery."
Senate Majority Leader Mitch McConnell says that, whatever shape the next stimulus package takes, it's likely to be the last one. "We're taking a careful look at a fourth and final bill," McConnell said on Friday. "You could anticipate the decision being made on whether to go forward in about a month. And it will be narrowly crafted, designed to help us where we are a month from now, not where we were three months ago."
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