The $600 weekly unemployment bonus Congress offered under the CARES act ended on July 31, and lawmakers must decide whether it’s time to get Americans back to work. If so, they should either not extend the bonus or come up with a plan to phase it out, because continuing it would hinder our efforts toward economic activity. But if they conclude that it’s not time for the whole economy to return to work, they should consider extending existing relief programs.
The decision on whether to extend benefits rests on determining how the costs and benefits of reopening have changed since the beginning of the pandemic. If the negative effects of the virus are outweighed by the positive effects of reopening, businesses should be allowed to reopen to full capacity and begin filling jobs. This seems to be the path we’re on; though the country isn’t quite there yet, we are slowly moving toward full reopening.
The statistics are mostly positive, though each region faces its own trends. Overall, new daily deaths have decreased to well below peak levels, hospitals remain below capacity, and businesses are taking steps to reduce virus transmission in the workplace.
In Michigan, the governor has loosened some restrictions she imposed earlier in the year, though things aren’t fully back to normal. The reopening that has taken place means that the economy is recovering, and people should be encouraged to return to work where they can do safely.
A recovery is good news because economic prosperity is just as essential to the overall well-being of Americans as preventing them from getting sick. Joblessness fosters unfavorable physical and mental health outcomes. Anxiety, depression, and substance abuse are commonly associated with increasing rates of unemployment. Job security and a sense of normalcy go a long way toward a person’s physical and mental well-being, and phasing out federal unemployment bonuses can motivate workers to return to the workplace and start moving us back to regular conditions. Given that fact, Congress should consider how the bonus can hinder the efforts to secure the benefits of work for society.
If we are ready to get Americans back to work, Congress should be wary of the possible adverse effects of extending the bonus. In past recessions, it has been shown, increasing benefits encourages people to remain unemployed longer, hindering recovery efforts. And in our current situation, many people may find that augmented benefits are enough to support them into the foreseeable future. One study shows that the first extension of benefits, granted in March, will slow the economic recovery by causing longer periods of unemployment in the coming months. A second extension, which was not considered by that study, could extend joblessness even longer — at a time when we want people to be connected to the workplace.
Naturally, there are tradeoffs to eliminating or reducing the federal bonus. Altering or not renewing the bonus will harm people who, for whatever reason, can’t go back to work even if they want to. (Perhaps their jobs are gone, the risks of going to work are too great, or there isn’t demand for them.) Congress may wish to consider whether some people need additional relief, and that should be a different question than what to do about the unemployment insurance bonus.
Returning to normal economic conditions and allowing people to get back to work could be the tide that lifts all boats. We all do better when we are able to serve the wants and needs of others, and positive-sum, voluntary interactions create a more prosperous world. Staying home might have prevented the novel coronavirus from spreading, but it also meant that we aren’t performing as much mutually beneficial work.
Ultimately, the feasibility and desirability of reopening should inform the decision about bonus unemployment benefits. If it’s time to begin recovery efforts, policymakers should alter unemployment insurance benefits to avoid creating disincentives to returning to work. Otherwise, we are providing relief for one problem while creating another.
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