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Richer benefits made unemployment insurance a target in talks, Abraham says
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President-elect Joe Biden will have more success convincing Congress to extend jobless benefits than any push for topping up those payouts, former Bureau of Labor Statistics commissioner Katharine Abraham told MNI.
Additional weekly unemployment benefits authorized in the last two relief packages have made enhanced UI policy an "easy target" in negotiations, she said, because some recipients made more money than they did while working. Congress already cut the top-up from USD600 in the first round to USD300 late last month.
"You tell people these unemployed folks are getting more while they're unemployed than they were when they were working, and how does that sound? It sounds bad," she said in an interview Tuesday evening. "It undermines popular support for giving to people who need assistance."
"I worry people are going to lose their nerve because we're running up huge deficits, but what's the alternative? If we can keep people afloat, we're going to be in so much better of a position for the economy to rebound," she added.
Republicans who will still hold 50 of 100 votes in the Senate after Biden is sworn in Jan. 20 have argued against UI top-ups because they discourage recipients from returning to work, though evidence to that effect has been inconclusive. Biden is due to lay out a new fiscal package Thursday night that he's signaled could cost trillions, and has stressed the need to help struggling families.
SEEKING EXTENSION BEFORE MARCH
Checks sent under the CARES Act and the latest relief bill represent "bad targeting," Abraham said, and should instead focus on the unemployed through extended benefits.
Biden will likely push to extend jobless benefits again before they lapse in March, she said. The 11-week extension announced late last month probably reflects only "what could be negotiated at that point in time."
But the Covid-19 pandemic has exposed weakness in the nation's unemployment insurance system, and getting funds to those who need them most may not be as simple as it sounds, she said.
"It's kind of bringing home the fact that we've underinvested in that infrastructure," for paying claims, she said. "That's the reason why we were topping benefits by $600 instead of raising everyone's replacement rate, which would have made more sense."
SKILLS WON'T FADE AWAY
Abraham said people who have been out of work for six months or more will struggle to find jobs after the pandemic, but she doesn't see them losing major marketable skills. Fed officials have voiced concern that long-term layoffs will lead to "scarring" and hamper efforts to restore full employment.
"I'm not super worried about skill atrophy on this timescale," she said. "It may be loss of confidence or other things, but I don't think it's loss of skill that's the issue."
The number of long-term unemployed, or those jobless for upwards of 27 weeks, reached 4 million in December, accounting for 37.1% of total unemployment, edging closer to the record 45% seen following the Great Recession.
Employers in some industries, particularly in hard-hit services, may be more willing to hire the long-term unemployed once the virus outbreak is under control, she said. But a majority will struggle to find jobs again.
"There are a lot of people out of work through really no fault of their own, but if you think about what employers are doing, they're looking at a whole set of people who are applying for jobs, some of whom have been out of work for a long time and some of whom haven't," she said. "I'm not optimistic that they're going to look at them as being on a level playing field."