(The Center Square) — Should Congress renew the $600 per week unemployment supplement? Economists differ on the benefits of the additional federal money.
Friday marked the first workweek that out-of-work Illinoisans did not get an additional $600 in federal money to supplement state-based unemployment benefits.
Congress let the Federal Pandemic Unemployment Compensation Program end in July and has yet to reach an agreement on whether to extend it or at what dollar amount.
U.S. Sen Dick Durbin, an Illinois Democrat, took to the Senate floor to punch back at Republicans who have said the extra money was keeping people from going back to work.
“It’s not an urban legend, it’s an urban lie,” he said. “This is just not a viable complaint against the unemployment system.”
He cited a Yale study that measured timesheet data from Homebase.
“We find that the workers who experienced larger increases in UI generosity did not experience larger declines in employment when the benefits expansion went into effect,” the authors wrote. “Additionally, we find that workers facing larger expansions in UI benefits have returned to their previous jobs over time at similar rates as others.”
Another study by researchers from the University of Chicago found most workers who received unemployment benefits during the pandemic were paid more to stay home than they were to go back to work.
“We find that 68% of unemployed workers who are eligible for UI will receive benefits which exceed lost earnings. The median replacement rate is 134%, and one out of five eligible unemployed workers will receive benefits at least twice as large as their lost earnings. Thus, the CARES Act actually provides income expansion rather than replacement for most unemployed workers.”
The University of Chicago study authors added that unemployed workers also lose other benefits like health insurance but still predict the replacement wages could hamper recovery efforts.
High replacement rates can also encourage UI take-up and result in positive pecuniary externalities from greater spending,” they wrote. “Weighting these channels strongly would suggest the desirability of unusually high replacement rates. At the same time, very high replacement rates can induce both distributional concerns between ‘essential’ and ‘non-essential’ workers and labor supply disincentives as the economy recovers.”
A poll by the nonprofit Foundation for Government Accountability found more than half of those asked wanted the federal supplemental payments to end.
“The American people are not in the mood to pay people to stay home,” said Tarren Bragdon, CEO of FGA.
Senate Majority Leader Mitch McConnell said Wednesday that the $600 payment is too much and unfair to workers deemed essential. Durbin said the benefit is a lifeline to people forced to stay home and the GOP is denying that help.
President Donald Trump’s administration wants to renew the federal supplement, but at an amount less than $600 a week.
Cole Lauterbach reports on Illinois and Arizona government and statewide issues for The Center Square. He has produced radio shows for stations in Central Illinois and created award-winning programs for Comcast SportsNet Chicago.