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Chairman Yarmuth: “Enhanced Unemployment Insurance remains a vital lifeline for workers and families”

Aug 4, 2020

Washington, D.C.— Today, the House Budget Committee released a report on the importance of extending the supplemental Unemployment Insurance benefit to our nation’s recovery. COVID-19 cases continue to surge, and millions of Americans are out of work through no fault of their own. The report highlights how the enhanced UI benefit has helped keep households and the economy afloat while also supporting containment efforts by ensuring workers do not have to choose between their health or their paycheck.

“The current seven-day average of new COVID cases is five times what it was when the CARES Act was enacted in March, unemployment levels remain at historic highs, and our economy hangs by a thread. This crisis is not done — and neither is our job,” said House Budget Chairman John Yarmuth. “Enhanced Unemployment Insurance remains a vital lifeline for workers and families struggling to put food on the table, pay their rent, and care for their children during this national crisis. But instead of protecting this critical relief, Republicans knowingly and cruelly let it lapse. It’s past time that Republicans join Democrats to extend enhanced UI and work to avert any further suffering for American families." 

Text of the report is below, and a PDF can be found here.


Enhanced UI Saves Lives, Livelihoods, and the Economy

Republicans’ refusal to extend the CARES Act’s $600 weekly unemployment insurance (UI) supplement beyond its expiration last week will needlessly hurt the 30 million Americans – nearly one in every 5 workers – whose livelihoods depend on this crucial support. It also threatens to deliver a severe, self-inflicted blow to an economy already under siege from a relentless virus. Congress must act immediately to stem the damage by restoring and extending the enhanced UI benefit until economic conditions significantly improve.

The coronavirus is still raging — The $600 supplement was intended to support family incomes until the public health crisis receded and it was safe to reopen businesses and return to work. But in the absence of competent national leadership, all the sacrifices Americans made to contain the virus over the last few months have been squandered. COVID-19 cases have spiked since the middle of June, forcing states and localities across the country to reverse or slow their reopening plans. With the seven-day average number of new reported cases five times higher than at the time the CARES Act was enacted, there is even more reason – and need – to continue the enhanced UI benefit today. “The path of the economy,” Fed Chair Jay Powell stressed, “is going to depend to a very high extent on the course of the virus, and on the measures that we take to keep it in check.” The enhanced UI benefit goes a long way toward ensuring workers do not have to choose between their health or their paycheck, supporting containment efforts.

Enhanced UI keeps households and the economy afloat — The economy shrank by an unprecedented 9.5 percent in the second quarter of this year, wiping out nearly five years of economic growth in just three months. Despite this painful contraction, fiscal support bolstered real incomes – protecting family pocketbooks, reducing hardship, and cushioning the economic blow. In fact, the $600 supplement alone largely offset the decline in private-sector wages and salaries between the first and second quarters of the year. This economic lifeline prevented surges in poverty and evictions even amidst the worst downturn since the Great Depression.

Enhanced UI has not slowed employment — While the $600 supplement clearly boosted the economy, a growing body of research fails to find any evidence so far to support Republicans’ claim that it has depressed employment or slowed rehiring overall. The reality is that with unemployment still at record highs, a growing number of job losses becoming permanent, and only one job opening for every four unemployed workers, there are simply not enough jobs – and, critically, not nearly enough safe jobs – today. A raging virus that takes lives, threatens workers’ health, closes businesses and schools, keeps children home and in need of care, and depresses economic activity across the globe is what is preventing Americans from returning to work, not “overgenerous” UI.

Our economy is hanging by a thread — While the last few months brought promising signs that a recovery was underway, real-time indicators suggest the recovery has stalled, or potentially reversed course, as infection rates have surged. The expiration of the $600 supplement throws our economic recovery into greater danger just as the economy has become more vulnerable. As one analysis shows, eliminating the $600 benefit will lower GDP in the second half of this year by 2.5 percent – more than a typical year’s worth of economic growth – and reduce employment by an average of 2 million jobs over 2021. The fall in consumer spending, moreover, would be greater than the entire decline over the Great Recession. Given the highly disproportionate impacts of the pandemic and its economic fallout, eliminating the $600 benefit also aggravates already severe inequities across race and income, dimming the prospects of a strong and broadly shared recovery.

Nearly three months ago, the House passed the Heroes Act to extend the $600 supplement into 2021, but Republicans failed to act. Their inability to govern and wanton disregard for workers and families has caused a painful – and avoidable – lapse in benefits. Meanwhile, the bill they slapped together at the last minute is a shameful non-starter that completely fails to support struggling Americans or bolster our economic recovery. Republicans must join Democrats and work to avert any further human or economic catastrophes caused by their reckless inaction.

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