A Top Democrat Backs $600 Unemployment Boost. Studies Show Increase Didn't Discourage People From Working

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  • Sen. Ron Wyden, D-Ore., the incoming chair of the Senate Finance Committee, is calling for a $600 weekly boost in unemployment benefits.
  • That's the same level as an earlier CARES Act enhancement. Republicans had said a $600 supplement would keep people from working.
  • A new Yale University study suggests that didn't happen since demand for workers fell significantly.

Sen. Ron Wyden, an Oregon Democrat and the incoming chair of the Senate Finance Committee, is calling anew for a $600-a-week increase in jobless aid.

That backing comes as a new study, published by researchers at Yale University, found that a $600 boost to weekly unemployment benefits didn't keep Americans from looking for work over the spring and summer when a prior enhancement was in place.

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A payment of that magnitude, along with a mechanism to phase out benefits as economic conditions improve, will help families get through to the end of the crisis, Wyden said.

"My starting point here is going to be my legislation that would reinstate the full $600 weekly and tie additional weeks of benefits and the program for gig workers to economic conditions," according to a statement from Wyden's office.

"There's so much work to do, and the Senate can't be revisiting economic relief every two or three months," he added.

Democratic control

The recent $900 billion relief package increased jobless benefits by $300 a week, from early January to mid-March. That's the same level as a federal Lost Wages Assistance subsidy in place for six weeks starting in early August.

But a $600 weekly infusion may be more likely after wins in two Georgia runoff contests last week gave Democrats control of the White House and both congressional chambers. President-elect Joe Biden has called the latest relief measure a down payment and wants Congress to send more to ailing families.

Congress may be able to issue more Covid relief through a process called "budget reconciliation," which would allow Democrats to pass certain legislation with a simple majority vote, some political experts believe. The GOP passed its tax law in 2017 using that mechanism.

The Biden transition team didn't comment on whether the president-elect supports a $600 boost.

Work disincentive

The $600 enhancement was provided by the CARES Act relief measure. The funds, which came on top of typical state benefits, were available for about four months through the end of July.

Democrats generally supported it as a necessary income support for people who were unemployed through no fault of their own during the Covid pandemic.

The policy aimed at fully replacing lost income for the average unemployed worker.

However, 76% of people were eligible for more money from jobless benefits than their prior paychecks as a result of the subsidy, according to an analysis published by economists at the University of Chicago.

That dynamic led Republican lawmakers to criticize the supplement as a labor disincentive that would entice people to remain out of work and delay a return to their jobs.

In April, the Heritage Foundation, a conservative think tank, estimated the enhancement could lead almost 14 million more people to lose their jobs and result in up to $1.5 million in lost economic output.

But the $600 benefit didn't have a negative effect since demand for workers fell significantly, according to Dana Scott, a doctoral student in economics at Yale and a co-author of the new study.

Workers with more generous benefits, who tend to be lower earners, didn't return to work less readily than others, the paper found. Multiple economic studies published over the summer had similar findings.

The new results are significant given potential renewed interest in reviving a $600 weekly enhancement among some lawmakers.

Some are calling for more relief to buttress families amid signs of deteriorating economic conditions and rising coronavirus caseloads. The U.S. economy shed 140,000 jobs last month, the first drop since April. More than 19 million Americans are still collecting unemployment.

A $600 boost to benefits may have a work-disincentive as the economy normalizes and labor demand increases, Scott said. While employment had been slowly improving until December, demand for workers is still likely reduced due to rising Covid cases and accompanying business restrictions, she said.

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