Sunday, July 26, 2020

The unemployment benefits controversy

A massive portion of the huge stimulus package passed by the U.S. Congress was to give each American individual USD 1,200.00 and their dependents USD 600.00. Also included was the extension of the unemployment benefits to include USD 600.00 each week on top of the state benefits. The federal benefits will expire on July 31, 2020 unless extended. These extended federal benefits were meant to a safety cushion against the historic unemployment that is now raging in the U.S. due to the pandemic. Now the problem is the federal government has also extended loans to businesses hurt by this pandemic with the condition that they must retain their employees when their business opens. Now the extra 600 dollars in addition to the state benefits have created the undesirable effect for people who are making more now while sitting at home doing nothing than working and this has also make life difficult for small businesses to attract new or even former workers because the workers would be making less than by just claiming unemployment.

Although the federal benefits will end in July 31, 2020 if not extended but people are still hoping that it may be extended due to a new bill introduced in Congress extending it to January 2021 or whenever the government decides the end of pandemic. Besides its massive debt it has created and the overly generous benefits given to people, it has also created a shortage of staff who are willing to take an essentially pay cut by going back to their work place while there is no vaccine for this virus. In order to make sure that the economy does not collapse by the weight of the massive unemployment, this massive bill was passed which has now unintended consequences. It would have been better that the federal benefits should have been limited to USD 400 instead of 600 and should have lasted till November or December so that there would have been incentive to come back to work. It was already known that the virus is not going to end on July 31, 2020 and neither would the economy bounce back on the same day. Now with the bickering going on in Congress, it would be prudent that the first stimulus package even if it was going to be late should have been packaged in such a way to last longer than July 31, 2020 but as they say hindsight is always 20/20

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