As the end of July draws closer, tens of millions of Americans are set to lose the $600 a week in federal unemployment benefits meant to tide them over during the coronavirus pandemic. Though some lawmakers have suggested the benefits could be extended, they likely will not be as generous in the next stimulus package, according to Treasury Secretary Steve Mnuchin.
In the next stimulus package, the Trump administration wants to cap the benefits so that workers don't receive more in unemployment than they did at their jobs, Mnuchin said Thursday on CNBC. With the extra $600 per week, an estimated two-thirds of displaced workers are eligible for benefits in excess of their normal wages, according to a recent paper from the National Bureau of Economic Research.
"You can assume that it will be no more than 100%" of a worker's usual pay, Mnuchin said.
Critics of the enhanced unemployment benefit say it disincentives people from going back to work. But others say it's necessary when around 33 million Americans were still receiving jobless benefits at the end of June and states are re-closing parts of their economies as coronavirus cases spike across the country.
Recent research from the Chicago Federal Reserve found that people receiving unemployment benefits are actually more likely to look for jobs than those who have exhausted their benefits. And some economists say that continuing enhanced unemployment benefits — along with providing more food assistance — is one of the most critical things lawmakers can do right now to stabilize the U.S. economy.
Income for women and people of color will be hit especially hard if the $600 benefit expires, a recent report from the nonpartisan Congressional Budget Office found. Those groups have lost jobs at a disproportionate rate in the coronavirus recession.
Mnuchin said the administration does support another round of direct stimulus payments, though the "level and criteria" for checks still needs to be discussed with senators.
The House passed a bill in May that would extend the enhanced $600 benefit through December 2020 and provide another stimulus check to households. That bill is not expected to pass, though the Senate has so far not unveiled a new stimulus bill. Republican lawmakers have proposed other ideas, including one time back-to-work bonuses and tying aid amounts to the unemployment rate.
As Congress debates what to include in the next relief measure, nearly 32% of U.S. households missed their July housing payments, and experts warn of a looming "income cliff" for tens of millions of Americans.