Extra $600 in unemployment benefits delayed as talks in Congress stall

The U.S. Capitol stands in Washington, D.C., U.S. on Thursday, Oct. 1, 2020. Talks Thursday between Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin brought no immediate breakthrough on a deal for a new pandemic relief package, while the House prepared to vote on a Democrat-only plan.

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Democrats and Republicans still seem unable to find common ground on enhanced unemployment benefits, more than two months after the expiration of a prior, $600 weekly subsidy that had buoyed household income for millions.

White House officials and senior congressional Democrats are still trying to hammer out details of a fifth financial relief package to help counter the negative economic effects of the coronavirus pandemic.

Unemployment benefits appear to be a key sticking point in the negotiations, despite consensus in other areas like stimulus checks and aid for small businesses.

House Speaker Nancy Pelosi, D-Calif., at the U.S. Capitol on Oct. 1.

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‘Tremendous pressure’

It’s unclear whether congressional Republicans would support a $400-a-week policy or a bill with an overall price tag as high as the White House proposal.

“Negotiations are ongoing,” according to a White House spokesman. “The White House continues to reach out to Democrats in good faith to try and reach a deal on delivering relief to American workers.”

Treasury Secretary Steven Mnuchin during a Senate hearing on Sept. 24.

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Some experts remain hopeful lawmakers can still come to an agreement, especially as unemployment remains high seven months into the economic crisis and the presidential election looms in a month’s time.

“I think there’s tremendous pressure on both sides to pass something,” said Michele Evermore, a senior policy analyst at the National Employment Law Project. “Nobody wants to go home and campaign on, ‘We didn’t give you anything.'”

$600 unemployment

Republicans have criticized the supplement as a disincentive to return to work since it paid many people more than they’d earned on the job.

While anecdotal evidence suggests this may have been the case for some businesses, numerous economic studies found that, in aggregate, the $600 enhancement didn’t discourage people from looking for work or accepting job offers.

“Expanded UI benefits from the CARES Act appeared to be an important source of aggregate stimulus rather than an impediment to labor market improvement,” according to a paper published last month by the Federal Reserve Bank of San Francisco.

Democrats want to extend the $600 weekly payments, which come on top of state-allotted aid, to help bolster consumer spending and the U.S. economy as signs have emerged that the recovery is sputtering.

“We still have a massive gap in the labor market, and job growth is slowing,” said Heidi Shierholz, director of policy at the Economic Policy Institute and a former chief economist at the Department of Labor during the Obama administration.

The unemployment rate fell to 7.9% in September after businesses added 661,000 jobs, the Bureau of Labor Statistics reported Friday. That rate is down from a 14.7% peak in April, the highest recorded since the Great Depression.

There are 10.7 million fewer jobs now than in February before the pandemic-induced recession, according to the Bureau. The true figure likely exceeds 12 million jobs when factoring in prevailing monthly job-growth trends that had been occurring pre-pandemic, Shierholz said.

Lost Wages Assistance

President Donald Trump appears intent on passing another relief package before the November election.

“OUR GREAT USA WANTS & NEEDS STIMULUS. WORK TOGETHER AND GET IT DONE,” Trump tweeted Saturday from Walter Reed Medical Center in Bethesda, Maryland, where he’d been receiving treatment for Covid-19.

The Trump administration had enacted a Lost Wages Assistance program in August that offered a $300 weekly supplement to unemployment benefits for up to six weeks, paid for with federal disaster-relief funds. (A few states paid an extra $100, for a total $400.)

Workers in some states haven’t yet received that aid, however, due to administrative delays. And hundreds of thousands of workers, primarily low-income and part-time workers, weren’t eligible for that money due to program guidelines.

If Congress and the White House reach a deal on unemployment benefits, a relief measure may be delayed by lack of common ground elsewhere, like additional aid for state and local government. And extra jobless aid would likely only last for a few months.

“I do think there’s been some progress made, and now it’s [down to] whether they’ll get something all the way through,” Andrew Stettner, a senior fellow at the Century Foundation, said of relief talks. “Even if this thing passes, they’ll have to come back to it in December or January.”

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