The way I
see “his plan” at this early stage
(Seems like
a 2020 campaign gimmick)
From
NBC News (Martha
White): Congress is debating how, or how much to further support workers and
the pandemic-devastated Main Street economy. Experts who have weighed in on
this topic below:
Jeff Strohl, Director of Research at
Georgetown University’s Center on Education and the Workforce says: “The
evidence we have from the Great Recession is that stimulus money stopped too
short, and that actually ended up elongating the recession. While generous
unemployment assistance can slow re-entry into the workforce, the extreme
demand-side shock characterizing this recession makes it much likelier that
workers are drawing unemployment because they can't find a job. Some 46% — or nearly
half — of job losses have occurred among workers with a high school education
or less, making the supplemental payments a critical stopgap. That $600 is
going to make or break a household there. Cutting off those payments too soon
could kneecap any economic recovery. That $600 is more likely to be
supplementing consumer demand, which would lead to a speedier recovery. With
the demand shock we’re having, this sound like a case of penny wise, pound
foolish.”
A Democratic
proposal would extend the expanded unemployment benefits that are giving some
30 million jobless Americans up to an additional $600 a week through the end of
the year.
This program, part of the $2 trillion CARES Act stimulus package
passed in March, is currently scheduled to expire at the end of July.
Trump and
some Republican lawmakers point to the surprising growth of 2.5 million jobs in
May as reason to allow the program to lapse.
W/H National Economic
Council director Larry Kudlow labeled the $600 weekly payments a “disincentive” and saying: “That low-paid workers would opt to stay home
and earn more than they would if they reentered the workforce.”
The White House and some Congressional Republicans
have proposed offering some form of “back-to-work” bonus.
Kudow said on CNN but
w/o details: “The
president is looking at a reform measure that would still provide some kind of
bonus for returning to work, but it will not be as large and it will create an
incentive to work.”
Sen. Rob Portman (R-OH) would give returning workers an
extra $450 a week.
Rep. Kevin Brady (R-TX) has suggested a $1,200 “hiring bonus”
that would allow workers to keep their $600 payments for a further two weeks
once they were employed again.
(My notes on all that: GOPers always and still do
all the time say that DEMS love to give away “free stuff.”
But for them now to
offer a bonus for people to return to work. That to me should be up to their employers
and not from government to give them a “return to work bonus which is from the
taxpayers.”
That idea is plain silly to me. Giving help to those who had to leave
their jobs due to the virus and lock-down/shut-down orders due to no fault of
their own, is yes, justified – they indeed needed help. But not for going back
to work like this proposal suggests – that just seems stupid to me.)
Daniel Zhao, Senior Economist at
Glassdoor says job openings are down by about 30% from pre-crisis levels,
thus: “Policymakers have to navigate this difficult
balancing act. There will be a point in time where it makes sense to push
unemployed workers back into the labor force, but whether that's right now is
an open question. This is still heavily depressed. Right now the ratio of
unemployed workers to job openings is just totally out of whack. With an
estimated 70% of the country’s economic activity generated from consumer
spending, putting money in the pockets of Americans has allowed some amount of
economic activity to continue.”
Fact: Unemployment programs, which are
administered by the states, often replace less than half of what workers earn. Lawmakers
settled on the $600 figure because that amount came roughly closest to making
workers whole.
Although less severe than the current unprecedented plunge in
employment, the Great Recession’s depth and duration yields some insight into
how people behave when they lose their jobs.
As with
today, flagging demand was a key factor driving unemployment higher.
In 2010,
the San
Francisco Fed found that if the demand is there and jobs are
available, people will go back to work, with people receiving expanded
unemployment benefits only remaining out of work for 1.6 weeks longer than
those without.
Ian Shepherdson, Chief Economist at
Pantheon Macroeconomics says: “While enhanced
unemployment benefits have shielded millions of people from the financial
consequences of unemployment, turning off the stimulus tap too quickly would trigger
a financial hard landing for everyone who has not been called back to work.”
Economists from the Center
for American Progress suggested that most out-of-work Americans spent
their benefits on necessities, helping to stimulate demand and drive economic
activity, writing: “Many households simply do not have the
resources to continue to pay their bills and put food on the table in the
absence of unemployment insurance benefits.”
My 2 cents: My notes are above. Here is list of state
unemployment payments for 26-weeks of unemployment:
MA is #1: $823 / week and w/Dependents: $1,234 / week.
AZ is bottom of the list: $240 / week – dependents not
listed.
My state: NY is $504 / week.
Average seems to be around $500 or so across the board.
Need a reason to go back to work? Check
out this article (Forbes).
Now we wait and watch how the GOP-run senate and Trump
react to any House-run DEM spending proposals.
As for Trump: His #1 goal is to fluff and brag on himself and to show his base (mostly) how big of hero who saved the day he is.
So, on that front, stay tuned
and just watch it all unfold in his favor – or at least he thinks to.
Thanks for stopping by.
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