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Should Congress extend the additional $600 per week in unemployment?

The emergency unemployment benefits millions of Americans have been receiving are proving to be a major dividing point for lawmakers working on a coronavirus relief package. Should the extra $600 per week be extended through the end of 2020, or tapered to a smaller amount? The American Enterprise Institute’s Michael Strain and the University of Chicago’s Austan Goolsbee join Judy Woodruff to discuss.

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  • Judy Woodruff:

    The battle over the emergency unemployment benefits that millions of Americans had been receiving is a big dividing point in the debate over a COVID relief package.

    Democrats say the extra $600 should be extended until at least the end of the year. The president, Senate Majority Leader Mitch McConnell, and many Republicans have said the benefits should be lowered to $200 through part of the fall. And it would then, they say, be tapered to 70 percent of what a worker's salary was before he or she lost their job.

    We're going to look at these ideas and the possible impact with Austan Goolsbee. He's the former head of the Council of Economic Advisers under President Obama. He's now at the University of Chicago. And Michael Strain, he is an economist with the American Enterprise Institute. He has testified before Congress. And he advised Republicans.

    Welcome, both you, to the "NewsHour."

    Austan Goolsbee, if you're there, I haven't seen you, but I think you're with us.

    The Republicans are arguing, most of them, many of them, that this $600 additional is something the government — I'm told we don't have Austan Goolsbee.

    Let me turn to you, Michael Strain.

    What is the argument for going from $600 additional to $200 a month? As you know, so many of these workers have lost their jobs. They haven't had the option to go back to work. That is a significant cut, isn't it?

  • Michael Strain:

    Yes, it is a significant cut.

    And that's an issue that Congress should address in a way other than by continuing the $600 federal supplement to state-provided unemployment benefits. The argument against continuing them — or the argument for the cut is that, as the economy continues to recover, and as the labor market continues to strengthen, paying people that much money in unemployment benefits that are conditioned on being unemployed will keep people out of the work force, and will keep the unemployment rate higher than it otherwise would be.

    It will serve as a disincentive to leave the unemployment rolls and to get a job. And the reason for that is because, at $600 a week in the federal supplement, average U.I. benefits are around $950 a week. And that is more weekly income that most people who are receiving unemployment benefits would make if they went and got a job.

    So, the incentive is to stay unemployed.

  • Judy Woodruff:

    Well, I think we now have Austan Goolsbee.

    Welcome to the "NewsHour."

    Austan, I don't know — Goolsbee — I don't know if you were able to hear Michael Strain, but his point is that a lot of people just don't have an incentive to go back to work because they're being paid more than they were even earning in the first place.

  • Austan Goolsbee:

    Yes, you hear that a lot from the Republicans.

    The only things I would say about that are, number one, that is not exactly how the unemployment system works, if you look at unemployment insurance. You can't quit your job and get unemployment, and you have to be searching for work. And if you're offered a job and turn it down, you're no longer eligible for unemployment insurance.

    The second is, this is a mentality which is coming from a normal time in the labor market. And this is emphatically not a normal time in the labor market.

  • Judy Woodruff:

    And what do you…

  • Austan Goolsbee:

    The reason people are out of work is…

  • Judy Woodruff:

    Go ahead.

  • Austan Goolsbee:

    … is that the virus is raging out of control.

    So, I think the evidence shows that there are not people — if you look at the generosity of unemployment insurance, it is not at all correlated with the unemployment rate. I don't think that is what is driving things.

  • Judy Woodruff:

    Michael Strain, what about that point, that we are in a very unusual situation, millions of work thrown out of work — millions of people thrown out of work, through no action of their own, and this is a way to, frankly, keep them whole, keep them able to pay their rent, to provide what their families need?

  • Michael Strain:

    Yes, I would say two things to that.

    The first is that I agree with Austan that the evidence to date suggests that the generosity of unemployment benefits is not keeping people on the unemployment rolls.

    But the policy question facing Congress is not whether we should have the $600 supplement in the month of July, or whether we should have had it in the months of May and June. The question is whether we should have it throughout the fall and into the winter, and to the end of calendar year 2020.

    And I think that, as the year continues, as the economy continues to recover, as the labor market continues to strengthen, we're going to be more and more in kind of a normal recession.

    And, in that event, the $600 supplement would serve the purpose that it normally would, which is to keep people unemployed. I think you're right, Judy, that these benefits are really important for families, particularly low-income families.

    So, if Congress does cut the generosity of the benefit, I hope they find a different way to get low-income households the income support that they need during this really weak economy.

  • Judy Woodruff:

    Well, let me…

  • Michael Strain:

    But the choice between disincentivizing people from going back to work and supporting consumer spending is a false choice.

  • Judy Woodruff:

    Well, let me come back to you, Austan Goolsbee.

    It sounds to me as if Michael Strain — and he can correct me later if he wants — is saying that he expects the economy to get somewhat back on track, we will be in more of a — quote — "normal recession" in the fall, and the normal unemployment benefits should suffice.

    What about that?

  • Austan Goolsbee:

    Well, that is kind of the hinge pin.

    My view is, if you want to put in automatic triggers that we start reducing the unemployment benefits once you get the unemployment rate down to something like normal levels, fine. We should have a discussion like that.

    But what is happening here is, you have got a microeconomic problem and a macro problem. The micro problem is, the unemployment rate is double digits. These people lost their jobs through no fault of their own. They're not sitting at home because they want a vacation. And everybody recognizes that, and they're talking about sometime in the future when they think that it would be the disincentive problem.

    The macroeconomic problem is, this is a massive number of people who the evidence shows this supplement to their unemployment insurance is the only thing maintaining their consumer spending.

    There is going to be a massive drop-off of the spending levels if these people are cut off, and there will probably millions who are evicted from their homes. So, I think that that runs the risk of snowballing this into a deeper downturn, as opposed to extending the downturn.

  • Judy Woodruff:

    Michael Strain, you're not concerned about that?

  • Michael Strain:

    Well, I just think it is a false choice.

    The choice is not between keeping in place a program that strongly disincentivizes people to go back to work as the economy strengthens and as the labor market recovers and supporting consumer spending.

    You can reduce the generosity of unemployment insurance benefits and reduce the disincentive to go back to work, while also supporting consumer spending by increasing transfers to households, particularly low-income households. That's what I would…


  • Judy Woodruff:

    So, you're saying provide money through a different channel.

    But let me — Michael Strain, let me just ask you. You're also assuming the economy is going to get better, right? And I'm curious know what you base that on, because, right now, the coronavirus is raging as — for weeks on end.

  • Michael Strain:

    Yes, that's right.

    I mean, I think there's very little chance that we're going to see an economy that is as bad as the economy was in March, April and May. Consensus forecasts suggest that the unemployment rate will be lower in December of this year than it is now, that the economy will be stronger in December of this year than it is now.

    We may have a kind of stop-and-start economy in the fall, where we take three steps forward and one step back. That seems to be what's happened this summer. We took big steps forward in May in June. We may have taken a step back in July.

    But I think that the consensus…


  • Judy Woodruff:

    Let me just interrupt you there, because I want to — just in our — I'm sorry to interrupt you.

    I just want to give Austan Goolsbee a chance here at the end to respond, because what you're — I think what he's saying is that he does expect the economy to get better.

  • Austan Goolsbee:

    Yes, look, and I hope he's right. And I appreciate that Michael's argument is, if you're not going to give U.I. money, then we need to give money to ordinary people in some other form.

    That's not really what the argument is in Washington right now. It's to reduce the amount to people. And I think, if the virus starts raging out of control again, we're going to have another downturn.

    And the thing that's keeping people out of work now is that there's not demand. And this same mentality was with us at the outset of the crisis, when the same people argued that there should not be a national paid sick leave policy, at no cost to the workers, because they said it would disincentivize them from going to work.

    But I wish we had had that policy, because one of the major sources of infection has turned out to be people with symptoms going to work because they needed the money and getting their co-workers sick.

  • Judy Woodruff:


  • Austan Goolsbee:

    So, I just think the virus is the boss here. We have got to control this virus.

    And once the virus is under control, then we can go back to a more normal labor market. But, until that happens, you have got to support people.

  • Judy Woodruff:

    Well, these are the very same — or at least some of the very same debates we know they're having right now on Capitol Hill.

    I want to thank both of you for joining us.

    Austan Goolsbee, Michael Strain, thank you.

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