In the CARES Act, Congress added an extra $600 boost to the
unemployment program during the COVID-19 lockdowns that left tens of millions
of Americans out of work. That boost expired in July, but Congress once again
is debating whether to let it stay in the past. Congress must not extend
this benefit and here are three big reasons why:
#1: It isn’t an incentive
to go back to work
$600 might not seem like much, but when it combined with
state unemployment programs, many across the country were experiencing a sudden
windfall. It was also unprecedented—even during the Great Recession, the boost
was only $25.
Thanks to this massive influx of stay-at-home pay, nearly seven
out of 10 people who received the boost were getting more than they were
earning at their original job. One in five were getting two times their old
paycheck. The Congressional Budget Office also says that if the boost is
extended, five of every six people in this country will get more than their
salary to stay home indefinitely. The average unemployed worker received nearly
$1,000 per week, which would amount up to $50,000 a year.
Great for bank accounts—terrible for business. 65 percent of
small businesses are having a tough time getting their workers to return. The
United States has already lost more than 140,000 small businesses to the
COVID-19 lockdowns. Now the businesses that were able to weather that storm are
forced to compete with welfare for their employees. With no financial incentive
to return, how can businesses be expected to win that fight?
#2: It’s allowed fraud to
run rampant
The $600 boost contributed to fraud. Traditionally, refusing
to return to work so you can stay on unemployment in and of itself was fraud,
but the fraudulent behavior doesn’t end there.
The U.S. Department of Labor estimates that $26 billion of
improper unemployment payments is directly attributable to the CARES Act, and
the attacks range from identity theft to international criminal activity.
With overwhelmed state systems and a huge influx of cash
available, increased benefit durations past state maximums, permitting states
to suspend critical job search requirements, and benefits for previously
ineligible people, it was a perfect storm for fraud to run rampant.
Extending the boost will do nothing but continue making
criminal activity more lucrative.
#3: It’s holding back the
American recovery
Rampant fraud and workers who refuse to work don’t set
America up for a successful recovery. Before COVID-19, American unemployment
was at historic lows, wages were rising, and jobs were plentiful. We can get
there again, but it’s going to take an act of courage from Congress. It’s
imperative that Congress resist temptation to extend the unemployment boost.
Small businesses, federal and state budgets, and the long-term success of our
workforce depend on it.