In three weeks, the $600 federal jobless benefit that has been added to the state’s unemployment checks will end.
These payments have put $18 billion a week, a total of $288 billion for 16 weeks, into the world’s largest economy since the COVID-19 crisis began.
The Financial Times reported the cash has exceeded earnings for 68 percent of workers, and doubled them for the lowest-wage workers, according to a study by economists at the University of Chicago and the National Bureau of Economic Research.
But unlike program critics who say laid-off workers collecting these payments make more money being unemployed, Peter Griesar, the founder of Brazos Tacos, a Mexican diner in downtown Charlottesville, Virginia, disagrees.
Griesar posted on his restaurant’s Twitter account the payments should continue. He wrote the cash is still needed because of “demand suppressed” by coronavirus.
“We don’t see that changing for the rest of the year, extend it,” he wrote.
The money that allowed as many as 15 of his former employees to stay financially solvent was not a “disincentive to work,” he wrote.
Griesar’s point of view is echoed by many U.S. economists, who have criticized Congress for its failure to renew the jobless benefits.
In May, the U.S. House approved a $3 trillion coronavirus spending package that would have extended the $600 until January. But the Republican-controlled Senate has not embraced the idea.
Ernie Tedeschi, an economist at Evercore ISI, told the Times there will be up to 1 million fewer positions between August and October if the support is withdrawn.
“If COVID cases and reclosures continue to rise, unemployment [benefit] expiration would make a bad situation even worse,” he said.
Jay Shambaugh, an economics professor at George Washington University, told the newspaper that the massive stimulus had sustained household incomes and helped preserve spending in recent months, but all that was now in peril.
“With rising infections and caseloads out there, and reopening scaling back in parts of the country, it seems that there’s a very good case to be made that the economy needs continued support,” he said.
Chris Rupkey, chief financial economist at MUFG, warned lawmakers that Congress better get its act together and inject more fiscal stimulus monies into the economy or business and economic activity could sink back closer to those crushing record lows made back in April.”
Last week, U.S. Senate Majority Leader Mitch McConnell said he is open to more stimulus checks.
“I think the people who have been hit the hardest are people who make about $40,000 a year or less,” he said. “Many of them work in the hospitality industry…as all of you know, just got rim-racked, hotels, restaurants, and so that could well be a part of it.”