2020 started off as a promising year with unemployment rates at near record lows. As the COVID-19 pandemic made its way across the country, unemployment rates skyrocketed to never-before-seen levels and things are seemingly only getting worse with over 30 million U.S workers filing for unemployment since mid-March. High unemployment rates can affect far more than just loss of jobs, it can devastate the entire country’s economic well-being. It’s up to the Senate to pass the HEROES Act, which would extend the $600 per week unemployment benefits package.
Unemployment affects the job market, obviously. During this time, it is going to be even harder for individuals to find jobs given limited supply of opportunities. Low employment rates show that businesses as a whole aren’t doing well. It’s simple economics. In times of recession, consumers tend to spend less which in turn affects business’ profits, therefore leaving less funds to spend on payroll.
Because of this, those who are still employed will face the brunt of this recession as well. With lower profits, companies will likely have to freeze any raises. Additionally, 401(k)’s might be affected as well. With businesses doing badly, the stock market is likely to follow suit. This affects stocks and investments as recession entices investors to pull “risky assets.”
Currently, the $600 per week unemployment benefit package is set to expire at the end of July unless the Senate acts to extend it. Not only will this negatively affect the millions of families and individuals reliant on these checks, it will likely disrupt the economy even more. According to Forbes, many representatives are divided on the issue. While some are in favor of continuing the $600 per week benefit program under the CARES Act (Section 2104), many believe its incentivizing citizens to never go back to work.
While it seems insidious, representatives against extending the bill noted that two-thirds of those applying are actually earning more on unemployment than they were at their jobs. Senator Rob Portman (R-Ohio) proposed a “back-to-work” incentive that would provide $450 per week rather than $600. “I agree people actually want to go back to work,” Portman said before the Senate. “I think it’s wrong to say that people want to stay on (unemployment insurance). I think people like being at work. But when they can make a lot more money not being at work, it does create a disincentive.”
Regardless, the coronavirus is continuing to spread across the U.S and this problem of mass unemployment will likely continue to worsen. Many agree that without the federal unemployment benefit packages, the economic downturn would’ve been massively worse. Back in May, the House of Representatives passed the HEROES Act, which would extend the $600 per week unemployment benefits and is waiting to be reviewed by the Senate. The Senate is adjourned until July 17 when they will likely review the HEROES Act and tackle the unemployment issue.