To unleash the economic recovery, Congress must fix the unemployment debacle

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In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which made sweeping changes to the unemployment system. This legislation and the Families First Coronavirus Response Act (FFCRA) expanded unemployment insurance (UI) eligibility to new groups of people who were previously ineligible, increased benefit duration past state maximums, and allowed suspension of job search requirements.

The most significant change was adding a temporary $600 per week unemployment bonus on top of existing benefits, set to expire in July. Congress had never passed a boost to unemployment benefits this large in the entire history of the program. In fact, this UI bump is a whopping 24 times larger than the $25 weekly boost given during the Great Recession.

In the aftermath of the COVID-19 pandemic and economic lockdowns, states’ unemployment insurance trust funds are on the brink of insolvency. Unemployment claims have skyrocketed, topping 45 million since mid-March and wiping out nearly three decades of job growth. By mid-April, UI trust funds had dropped by nearly $12 billion, with some states’ funds falling by more than 50 percent.

Worse yet, the UI bonus is discouraging work and slowing recovery. The pandemic boost nearly tripled unemployment benefits, with the average unemployed worker now collecting nearly $1,000 per week—the equivalent of more than $50,000 annually. For most unemployed Americans, sitting at home now pays better than returning to work. This disincentive to work is devastating employers who are trying to reopen and save their businesses from bankruptcy or closure.