Senate Republicans have so far resisted extending the assistance program to $ 600 / week because they feel the amount is too generous and deters unemployed Americans from returning to work. But this argument has no basis in fact, and this position makes no political sense.
Many critics opposing the $ 600 / week extension cite a survey conducted last May by the National Federation of Independent Business (NFIB), which included a question on whether this additional amount made it more difficult for employers to rehire workers. The NFIB has 300,000 members of small business owners and the occupational group took a random sample to answer questions that include the effects of enhanced unemployment benefit.
They managed to collect 685 responses in this survey and only 18% (123 companies) admitted that an employee had declined a job offer and preferred to remain unemployed. In contrast, nearly seven in ten companies said they had not encountered this problem and were able to get people out of unemployment and back to work.
It stands to reason that it would be a bad strategy for Congress to vigorously oppose this advantage on the basis of such a fragile investigative result.
There are also other reasons. The belief that many unemployed Americans would much rather sit on a couch watching TV during the day and collect temporary unemployment – instead of being employed, earning a secure income and receiving health care benefits – totally defies logic.
People want to return to a safe working environment and maintain their skills and professional contacts. They know full well that employers can choose from a much larger pool of unemployed people these days, given all the recent layoffs. Anyone who rejects an invitation to return to work runs the risk of losing that position altogether.
Also remember that there are many large industries where you cannot return to work at all, such as airlines, restaurants, accommodation, retail, telecommunications, banking, entertainment, petroleum. and advertising.
Locking in funds of $ 600 a week in the midst of the worst pandemic in more than a century is a foolish position to take politically. With a quick approach national election who will determine who sits in the Oval Office over the next four years and which party controls the Senate and House, it makes no sense to reduce that advantage when it can cause financial hardship for over 20 million voters which greatly depend on these funds at this time.
Some Republicans fear that such government spending will cause more red ink to flow and worsen the national debt.
It’s hard not to laugh at this feeling. What a terrible time to suddenly have religion and turn into born again deficit hawks! Such a position has no credibility after the enthusiastic support of the GOP for the tax cut of 2017, which mainly benefited wealthy households and, yes, also helped to explode the deficit!
Without a major tax package that comes close to the HEROES Act passed in the House, the economy would be doomed to woefully weak growth in the second half of this year.
Bernard Baumohl is Chief Global Economist at The Economic Outlook Group.