Why Congress must say no to the $600 unemployment bonus extension
By Brian BlaseCasey Mulligan and Doug Badger
New York Post, July 11, 2020 


House Speaker Nancy Pelosi demanded again today that Congress extend the federal unemployment bonus beyond its July 31 expiration.

Former White House economists Brian Blase, Casey Mulligan, and Doug Badger explained in a New York Post op-ed yesterday Why Congress must say no to the $600 unemployment bonus extension. “It’s vital that it get the incentives right to encourage work and smart business reopening.”
Key points:
  • The $600 weekly unemployment bonus lifted the average weekly benefit to nearly $1,000 across states. “Five out of every six recipients are receiving unemployment benefits that exceed their previous earnings, according to the Congressional Budget Office. This significantly depresses employment and makes it more difficult for businesses to reopen. The add-on payment expires on July 31. It should not be extended. Doing so would encourage workers to remain unemployed longer than they otherwise would and depress the economic recovery,” they write.
  • “We estimate that if the add-on is continued, more than 60 percent of those unemployed after July 31 would be out of work specifically because of the add-on.
  • “If political considerations lead to extension of the unemployment bonus, the amount should be as small as possible for the shortest possible period. Importantly, recipients should be allowed to keep any additional add-on payment if they go back to work. This bonus would be available to only those who were unemployed prior to June 30 so as not to create incentives for another round of layoffs.
  • “Congress also should avoid other actions that would discourage returning to work, such as subsidies for health insurance. Based on a survey from the Commonwealth Fund, nearly 98 percent of people who had employer health coverage in February still have employer health coverage. And of people who lost their jobs and had health coverage at work, people have maintained employer coverage by a 3:1 margin rather than enrolling in ObamaCare or Medicaid or becoming uninsured.”
“Policymakers must structure assistance in ways that minimize impediments to recovery,” they conclude. “Phasing out the federal unemployment add-on benefit and making it available to those who return to work is the best course for supporting economic recovery.”

Read the full article in the New York Post

The Galen Institute published a research paper by Blase, Mulligan, and Badger that contains further analysis of the issue and sets out principles to guide policymakers for “Getting America back to work and hastening the recovery.” 
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