Questions About the Future of Pandemic Unemployment Relief Benefits Leaving Millions in Limbo

Questions About the Future of Pandemic Unemployment Relief Benefits Leaving Millions in Limbo Questions About the Future of Pandemic Unemployment Relief Benefits Leaving Millions in Limbo

August 18, 20202 min read

For months, the millions of Americans displaced from their jobs due to the effects of the COVID-19 pandemic had the cushion of $600 per week of added benefits to look toward as a supplement to their state unemployment insurance benefits. That enhanced benefit, viewed by many as one of the most crucial aspects of the CARES Act, expired at the end of July, and Congress and the White House have yet to come to an agreement on what, if any, additional benefit will be provided as the nation continues to face the long and uncertain road back to economic normalcy.

Arindrajit Dube, professor of economics at the University of Massachusetts Amherst, has said that ending these additional benefits is a “terrible” idea, and that the failure to ensure their continuation will cause “pain among millions of families, drive down economic activity and impede our recovery.”

Dube was recently featured as a primary source in a hard-hitting editorial by The Boston Globe, in which the editorial board called for for an extension of the $600 benefit and used Dube's extensive research on unemployment to disprove assertions that the increased benefits were disincentivizing workers from returning to their jobs.

From the Globe editorial:

Is it possible that there will be a few cases where people choose not to return to work because the unemployment benefit is higher than their wages? Of course. But that number will be negligible. “These risks are so small compared to the really big risk, which is that all of these people — as opposed to some minute fraction who may not go back to jobs — are going to cut back on spending when they lose that benefit,” Dube said. “And that is going to be yet another unforced error in the set of many unforced errors that our government has done in handling this pandemic.”

As Dube said in a preliminary report on the pandemic relief benefits recently cited by Salon, “there is no clear indication that [enhanced benefits] had an impact on the employment in the data through late July.”

A chart from ‘The Impact of the Federal Pandemic Unemployment Compensation
on Employment: Evidence from the Household Pulse Survey (Preliminary),’ by Arindrajit Dube, published July 31, 2020

Dube is so highly-regarded as an expert on the issue of unemployment that in 2019 Philip Hammond, then-Chancellor of the Exchequer in the U.K., appointed him to conduct a thorough review of the international evidence on the impacts of minimum wage laws. The results of Dube's review, which found that the number of jobs cost by minimum wage laws is negligible and that they raise wages without much downside, were cited as evidence that there was “room for exploring a higher NLW [National Living Wage] in the U.K. up to two-thirds of the median wage.”

Connect with:
  • Arindrajit Dube
    Arindrajit Dube Professor of Economics

    Arin Dube’s research focuses on labor economics, fiscal policy, minimum wage policies, income inequality and the economics of conflict.

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