As federal lawmakers debate another relief package for the coronavirus pandemic that’s put approximately 35 million Americans out of work, a new study shows how generous (or not) the added unemployment benefits were in the initial stimulus bill addressing the crisis.
Two-thirds (68%) of jobless workers would bring home more money from their state unemployment insurance plus the $600 weekly supplement from the federal government than they would have on the job, according to University of Chicago researchers.
In fact, one in every five eligible workers would receive benefits that were double their lost earnings, added the researchers, who emphasized that they weren’t taking a position on whether the temporary benefits were too much or too little.
The median earnings-replacement rate was 134% of lost wages, they estimated. In every state, the median earnings-replacement rate exceeded lost wages, ranging from 129% in Maryland to 177% in New Mexico.
The supplemental $600 weekly benefit was one part of the $2.2 trillion CARES Act that also included direct $1,200 checks to most Americans, and potentially forgivable business loans. The additional jobless benefits expire at the end of July.
“Approximately 40% of all jobs paying less than $40,000 per year in February were gone in March, according to Federal Reserve Chairman Jerome Powell.”
The Chicago study, distributed by the National Bureau of Economic Research this week, said the benefit was a “substantial income expansion” for lower-income workers but pointed out that many workers might have also lost health insurance when they lost their wages.
Lawmakers passed the Coronavirus Aid, Relief and Economic Security (CARES) Act in late March to quickly inject cash into the economy as the country reeled from the outbreak and its fast-moving fiscal consequences.