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MNI POLICY: 'No Evidence' Extra US Benefits Slow Job Rebound

MNI (Washington)

Emergency federal benefits haven't discouraged unemployed Americans from returning to work, contrary to Republican lawmakers who say the CARES Act is holding back the job recovery during the Covid-19 pandemic.

Yale University researchers this month found "no evidence" that more generous benefits discourage work. Laid-off staff who experienced larger benefit hikes returned to work at "similar or even slightly higher rates than those who received smaller increases," Joseph Altonji, a co-author of the study, told MNI.

Under the CARES Act enacted in March, unemployed workers receive an additional USD600 per week on top of regular state unemployment benefits. That extra money is set to expire this week.

A Senate proposal released Monday cut additional weekly benefits to USD200 amid concerns that current benefits, which often exceed typical weekly wages, discourage returning to work.

Job scarcity and labor demand have been the main drivers of unemployment during the pandemic, and more generous benefits have "stimulated consumer demand and helped many people in need," giving the economy a necessary boost, Altonji said. That view was shared Wednesday by Fed Chair Jerome Powell, who said Congressional payouts so far have been very effective and continued fiscal and monetary stimulus is vital.


The "biggest disincentive to work right now is that there isn't work for people to find," Martha Gimbel, senior manager of economic research at Schmidt Futures, said Wednesday on a call with reporters organized by the Groundwork Collaborative, a progressive policy organization in Washington.

Gimbel, a former economist on the Council of Economic Advisers under President Barack Obama, said it's important to provide stability to families and communities during the pandemic. The extra USD600 has injected "much needed" funds into the economy and will bolster the recovery, she said.

"Our economy would be so much better off if families had money to spend while staying home for as long as this crisis lasts," she said.

MNI Washington Bureau | +1 202-371-2121 |
MNI Washington Bureau | +1 202-371-2121 |

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