New coronavirus stimulus should incentivize going back to work: Financial planner
Doug Flynn of Flynn Zito Capital Management on a new report from the Congressional Budget Office projecting a 10-year economic recovery from the coronavirus.
A top Republican introduced legislation this week that would offer a back-to-work bonus to unemployed Americans returning to their jobs after the coronavirus lockdown.
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Under the bill proposed by Texas Rep. Kevin Brady, the top Republican on the House Ways and Means Committee, recipients of unemployment benefits who go back to their jobs would be able to receive a one-time lump payment of $1,200, or two weekly payments of $600.
“We need these workers," Brady said in a statement. "Unless we can reconnect these workers with these Main Street businesses soon, that business may no longer be there. This proposal is an important part in preventing a prolonged recession.”
WHAT HAPPENS TO YOUR UNEMPLOYMENT BENEFITS IF YOU REFUSE TO GO BACK TO WORK?
Brady's bill could receive the backing of the Trump administration: Last week, White House economic adviser Larry Kudlow endorsed a back-to-work bonus for unemployed Americans returning to their jobs — an alternative to the extra $600-a-week in unemployment benefits supported by most Democrats.
"We've got to reward individuals for coming back to work," Kudlow said during a "Fox & Friends" interview. "There will be some kind of re-employment bonus. We're not going to go to the $600, that's a disincentive to work."
More than 40 million Americans have lost their jobs as a result of the coronavirus-induced economic shutdown, a rate unseen since the Great Depression. The nation's unemployment rate surged to 14.7 percent in April, and likely swelled to at least 20 percent in May.
CONGRESS HAS FUNNELED TRILLIONS TO CORONAVIRUS RELIEF. WHERE IS THAT MONEY GOING?
House Democrats, meanwhile, passed a $3 trillion economic-relief package in May that would expand the boosted unemployment benefits through the end of January. But Republicans have declared the bill dead on arrival, and Senate Majority Leader Mitch McConnell has said additional jobless benefits will not be included in the next package.
Republicans have voiced concern that the sweetened benefits are actually discouraging some workers from returning to their jobs. Roughly two-thirds of workers on unemployment are earning more from the government aid than they did at their old job, according to a paper written by economists at the University of Chicago's Becker Friedman Institute.
Once the $600-per-week expires at the end of July, the typical unemployment check — which varies by state — will return to below $400 per week.
The Federal Reserve's region-by-region roundup of anecdotal information known as the Beige Book, released last week, found that business owners struggled to bring workers back as a result of the boosted benefits. According to a separate Fed study, about 40 percent of Americans earning less than $40,000 per year lost their job in March.
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