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After May Jobs Surprise, Back-to-Work Bonus Would Ensure Continued Growth

June 08, 2020

New numbers from the Bureau of Labor Statistics confirm that the American economy added jobs, beating grim predictions by economists expecting a worse impact from the coronavirus pandemic. The unemployment rate decreased to 13.3% with 2.5 million jobs added—assisted by bipartisan relief efforts like the Paycheck Protection Program (as reported by the New York Times). These numbers will get a boost if Congress takes action on a Return to Work Bonus. Here’s why:

  • CBO ANALYSIS SHOWS EXTENDING BIG UNEMPLOYMENT BENEFITS MEANS LOWER EMPLOYMENT

According to an analysis from CBO: “The extension of the additional $600 per week would probably reduce employment in the second half of 2020, and it would reduce employment in calendar year 2021. The effects from reduced incentives to work would be larger than the boost to employment from increased overall demand for goods and services.”

  • WE SHOULDN’T FORCE EMPLOYERS TO COMPETE WITH EXPANDED UNEMPLOYMENT INSURANCE

According to the same letter from CBO, extending higher unemployment insurance payments would mean roughly five of every six recipients would receive benefits that exceeded the weekly amounts they could expect to earn from work during those six months.

  • SMALL BUSINESSES WITH NEW FLEXIBILITY ON RELIEF LOANS NEED TO REHIRE

The Paycheck Protection Flexibility Act, just signed into law, gives small businesses much needed flexibility to pay back and use loans, but they still need to spend 60 percent of the loan on payroll—meaning a bonus will provide additional incentive for employees to get off unemployment insurance.

  • LOWER PAID WORKERS SHOULD RECEIVE THEIR BEST PAYCHECK FROM WORKING, NOT UNEMPLOYMENT

Strong jobs gains were made among lower-paid workers, given that average hourly earnings for all employees decreased 6.7 percent from a year ago according to the monthly BLS jobs report. This number could go up, but many workers may prefer to stay on unemployment because it pays more, despite state eligibility rules that require recipients to take back their jobs. The Return to Work Bonus would make taking a job offer more attractive.

  • CONGRESS SHOULD ENSURE THAT UI FUNDING RECOGNIZES THAT THE GREATEST RELIEF FROM UNEMPLOYMENT IS EMPLOYMENT

Expanded UI benefits were intended to provide relief for those who lost their jobs due to the government lockdown—but these funds shouldn’t undermine a return to work. Rather than continue subsidizing unemployment where it is no longer necessary, these funds can be put to more appropriate use in encouraging workers to return to work.

We need to reopen the economy, and House Democrats proposal to continue incentivizing people to stay unemployed is misguided. Let’s provide incentives to get Americans back to work.

Want to read more on the fight against Coronavirus? Read our Coronavirus Bulletin here which contains our extensive FAQ about recent federal actions.

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