The extra $600 a week in unemployment benefits millions of Americans have received as part of coronavirus stimulus measures is about to expire. While resistance to extending or replacing the current benefits is breaking down, it may be too late to prevent wide-reaching economic consequences when unemployed workers lose their spending power.
Unemployment support under the CARES Act has provided millions of unemployed Americans with increased spending power amid amid the coronavirus pandemic, allowing for many to keep up on bill payments and shop for necessities even amid the current crisis. The benefits were so high that many households were making more than they had before the pandemic, and were able to spend more money as a result. Those benefits are set to expire late next week, however, and as it stands right now, there is no replacement.
The immediate consequence of unemployment support running dry is that the increase in spending power will disappear, leading to a substantial drop in spending by American households. The long term consequence is a broader economic slump due to less spending stimulating the economy, and a higher rate of poverty as many face being unable to pay rent and being evicted from their homes.
Extending and expanding the current benefits has been the goal of congressional Democrats, but this has put them at odds with congressional Republicans. They have argued that providing overly lofty benefits will "discourage" a return to work. The issue with this objection is that there is a stark lack of available employment in the country; pandemic related pressures have forced many companies to downsize, and many more to re-close storefronts amid a surge in infections.
Resistance to expanding benefits is eroding even among members of the Trump administration, but many are seeking to lower payments. Others are still suggesting return-to-work bonuses and payroll tax cuts, which could potentially help stimulate the economy and encourage a return to work, but the lack of available positions for lower-earning Americans, who are the most numerous of those at risk with the looming expiration of unemployment benefits, negates any benefits back-to-work bonuses might have.
While resistance is breaking down as many on capitol hill begin to take notice of the potential economic ramifications, it may be too late to save millions of Americans from financial repercussions. With Congress in recess and the current timeline of implementing new measures being weeks off, it could be weeks before millions of unemployed begin to see the next round of benefits.