Why any unemployment bonus would threaten America’s economic recovery

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In March 2020, Congress enacted a series of bills, including the Coronavirus Aid, Relief, and Economic Security (CARES) Act, to respond to the COVID-19 pandemic and economic shutdowns. These bills drastically expanded the nation’s unemployment insurance (UI) program by adding newly eligible individuals to the program, suspending work search requirements, increasing the duration of benefits, and adding a weekly $600 boost to those receiving UI.

Unfortunately, as UI claims skyrocketed across the country, this unemployment bonus discouraged many individuals from working—even as the country began to reopen. Stay-home pay had actually become more appealing than take-home pay for most workers. Although this UI boost expired at the end of July—helping to reignite the economic recovery and encourage a return to work—Congress is still considering reviving the unemployment bonus or creating a new one altogether.

The creation of a new UI boost of any amount would have severe and negative impacts on the American economy. It would immediately stifle the progress towards recovery, cause new UI claims to spike, and further drain states’ dwindling trust funds. Even a small boost would discourage individuals from returning to work, unnecessarily keeping the economy in a precarious situation for even longer.

Congress should reject calls to renew the $600-per-week unemployment bonus or to create a new UI boost at any level.