Trump govt mulls $450 weekly bonus to lure people back to work while looking to scrap $600 unemployment aid
President Donald Trump is keen to reopen the US even as the Covid-19 pandemic has taken a heavy toll, both in terms of lives and loss of livelihoods. The president was banking on a robust economy even a few months ago to see his reelection bid in November through. But the situation has turned for the worse drastically following the outbreak of the pandemic and now the president has to run against time to get things in order in little over five months.
The administration has now come up with an idea of providing a weekly bonus of $450 to lure people back to work, White House economic adviser Larry Kudlow announced on Tuesday, May 26. Speaking to Fox News, the 72-year-old director of the National Economic Council said the White House is having a careful look at the proposal to boost Americans who have lost their jobs in the wake of the pandemic to rejoin work. It is believed that the laid-off workers may not want to rejoin work amid the health scare as they are better off on the weekly federal unemployment payments worth $600 provided under the coronavirus stimulus package.
The bonus to incentivize people to rejoin work was first proposed by Ohio’s Republican Senator Rob Portman. He suggested that the unemployed people who are returning to work keep $450 out of the weekly $600 they are getting in additional federal unemployment benefits. The $600 unemployment aid is likely to be scrapped by July end, according to CNBC. The idea to give bonus emerged amid concerns that the benefits for the jobless are too high and could see people preferring to remain out of job. The Republicans are aiming to end the extra jobless benefit in the next pandemic aid package.
Praising Portman’s idea, Kudlow told Fox: “It may well be, it's something that we're looking at carefully. Senator Portman has a good idea. He understands incentives and disincentives. We want people to go back to work,” he said.
People are getting more funds than wages they lost
Earlier in May, a study published by three University of Chicago economists said two-thirds of workers who lost their jobs in Covid-19 are eligible for unemployment benefits that are more than their lost wages. Twenty percent of jobless workers can avail benefits that are more than double their lost wages, thanks to the weekly $600 federal employment support. Since average wages differ from state to state, a flat federal supplement means the total unemployment benefits now are higher than the average wages in at least 35 out of 50 states.
Kudlow said he doesn’t believe that the $600 support per week will be included as extra jobless benefits in a future coronavirus relief rule. “I frankly do not believe the $600 plus-up will survive the next round of talks, but I think we'll have substitutes to deal with that issue,” he said.
While Democrats want the weekly federal employment payments to remain in force, the Republicans are apprehensive that it will stop people from returning to work. Portman’s idea, on the other hand, is gaining momentum among the GOP ranks. The Republicans feel that once the state reopens, the economy will get a boost and the necessity for more federal funds will reduce. They fear that if the workers refuse to rejoin work, then the companies can’t start their rebounding process.