“Most people who were laid off, can’t find jobs,” said U.S. Sen. Sherrod Brown, D-Ohio. “For us to take that money away from them — where are they going to turn?”
But others say the enhanced benefits provide a disincentive to return to work, because many Ohioans right now receive more money from the unemployment system than they would earn from working.
U.S. Sen. Rob Portman this week said he believes Congress should extend the additional federal unemployment insurance benefit in some form, but people should not get paid more money not to work.
“We should fix this disincentive to work by making the benefit a percentage of your previous income,” he said.
Claims fall, but still highly elevated
About 3,854 workers in Butler, Champaign, Clark, Greene, Miami, Montgomery and Warren counties newly applied for unemployment compensation last week, which was a 15% decrease from the previous week, according to state data released Thursday.
In the seven-county region, 47,381 residents filed continued jobless benefits in the week ending July 18, a 3% decrease from the week ending July 11, the data show.
Statewide, about 423,672 Ohioans last week filed continued claims, which was 352,630 fewer than during the peak point of the economic crisis earlier this year. About 30,138 Ohioans filed for jobless benefits for the first time last week.
Unemployed workers have been receiving an extra $600 per week as part of federal stimulus aid that Congress approved in the spring to help out during the pandemic and lockdown, as many people were ordered to stay home and businesses were closed or scaled back operations.
But the supplemental federal benefits are set to expire July 25 in Ohio, unless Congress votes to extend them. Unemployment benefits are a week behind, meaning next week’s benefits would be the last to include the extra $600, said Brett Crow, a spokesman with the Ohio Department of Job and Family Services.
The average regular unemployment benefit in Ohio was about $380 per week before federal lawmakers approved funding the enhancements, Crow said.
Lawmakers are negotiating a new stimulus and federal aid bill, but it’s unclear whether enhanced unemployment benefits will be part of the next rescue package. There’s also no guarantee Congress will approve another round of stimulus.
The $600 debate
Some groups, like the liberal-leaning Economic Policy Institute and Policy Matters Ohio, have called on federal lawmakers to extend the enhanced jobless benefits.
EPI estimates that about 129,600 jobs in Ohio would be lost in the next year if the supplemental benefits are allowed to expire.
The enhanced benefits are helping prop up the economy and consumer spending, because it puts money into the pockets of unemployed workers, allowing them to continue to buy goods and services they need, said Zach Schiller, research director for Policy Matters Ohio.
If the supplemental benefits go away, many Ohioans will lose purchasing power and will struggle to pay their bills and will have to cut spending, he said, and businesses will see significantly lower sales and demand, which would lead to more layoffs, contributing to a downward economic spiral.
“It doesn’t just help the families that are directly affected, which in Ohio is more than half a million Ohioans,” he said. “It helps all of us, because it’s critical to maintaining demand.”
The economy’s main problem right now is there are way more unemployed people than there are open jobs, he said.
On the Senate floor on Wednesday, Sen. Portman said he thinks lawmakers need to remove the flat $600 in extra weekly payments because most people are making more on unemployment insurance than they earned at their previous jobs.
He pointed to a University of Chicago study that found that 60% to 70% of unemployment insurance recipients make more being jobless right now than they did working.
“We can help people to ensure they get the support they need but not have them being paid more than they would if they were going to work,” said Portman, who also supports offering return-to-work bonuses.
A big boost?
In June, the Congressional Budget Office issued a report that said extending the extra $600 in payments through Jan. 31, 2021, would mean that about five out of every six jobless-benefit recipients would receive payments higher than what they could expect to receive from working.
The report said that U.S. employment would be lower in the second half of 2020 and also in 2021 if the supplemental unemployment benefits were extended.
Richard Stock, director of the Business Research Group at the University of Dayton, said enhanced unemployment benefits are a lifeline right now, and losing them would be economically devastating.
In the Dayton metro area, there were 30,052 initial and continued claims last week, and the extra $600 per week will pump more than $18 million into the local economy, he said. The metro area includes Montgomery, Greene and Miami counties.
Based on that estimate, over the next six months, those additional benefits would inject almost $469 million into the Dayton region’s economy, at a time of mass unemployment and reduced demand, he said.
He said that money will help prevent evictions, foreclosures and families going hungry.
Stock said he would be OK with basing the amount of the supplemental payments on workers’ wages, to ensure they do not receive more money than they would from working.
But that is no easy task, especially for an already stressed and overwhelmed unemployment system, he said, and lawmakers should have already worked on a plan for that long before now, since the deadline is fast approaching.
“Part of the reason they did the $600 was because the bureaucracy that would be required for the other elements is intense,” he said. “This made a lot of sense to get things done quickly.”
“Where are the concrete proposals for the alternatives?” he said.
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