Unemployment benefits in next stimulus package: Here's what we know

Congress is unlikely to renew the extra $600 a week in unemployment benefits — which is set to expire at the end of the month — for out-of-work Americans even as the coronavirus pandemic continues to trigger a massive surge of layoffs.

Although some Democrats have pushed for the additional aid to be extended with businesses and workers still reeling from the virus-induced recession, the Trump administration and Republicans have argued the sweetened benefits are actually disincentivizing some Americans from returning to their jobs.

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"Unemployment is extremely important. And we need to make sure, for those who are not able to recover their jobs, unemployment is adequate," Senate Majority Leader Mitch McConnell told reporters last week. "That is a different issue from whether we ought to pay people a bonus not to go back to work. And so I think that was a mistake. And we're hearing it all over the country that it's made it harder actually to get people back to work."

Treasury Secretary Steven Mnuchin suggested last week the administration may replace the $600 a week in the next stimulus package but would cap benefits so that workers don't receive more money than they did at their previous job.

“You can assume that it will be no more than 100 percent" of a worker's salary, Mnuchin said.

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About two-thirds of workers on unemployment are receiving more government aid than what they earned 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. That's an income reduction of roughly 60 percent.

Although the Labor Department's jobs report showed that 4.8 million Americans returned to work in June, a resurgence in COVID-19 outbreaks has put the brakes on the labor market's nascent recovery. Some states have hit pause on their plans to reopen, while others are reimposing restrictions they had previously lifted, like shuttering restaurants and bars.

Economists are increasingly warning of a second wave of job losses amid a resurgence of COVID-19 cases. According to an analysis by Bloomberg Economics, 6 million jobs are potentially on the line, including higher-paid supervisors in sectors where frontline workers were hit first, like restaurants and hotels. It could also have a ripple effect in industries such as professional services, finance and real estate.

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Last week, United Airlines said it may be forced to furlough as many as 36,000 workers, or about 45 percent of its workforce. According to an estimate from the left-leaning think tank the Economic Policy Institute, up to 17.6 million Americans "probably won't return" to their pre-crisis jobs.

House Democrats want to continue the extra $600-a-week payment beyond July. In the $3 trillion HEROES Act, they proposed extending the $600 payments until at least the end of January. The bill also offered a so-called “soft cutoff,” which would give the extra money to individuals who needed it through March 2021.

Senate Democrats have also proposed legislation that would extend the weekly increase in aid. Introduced by Senate Minority Leader Chuck Schumer and Sen. Ron Wyden, D-Ore., the American Workforce Rescue Act would extend the sweetened benefits until the recipient's state three-month average total unemployment rate falls below 11 percent.

The benefits would drop by $100 for every 1 percentage point it fell below that, until unemployment was below 6 percent in that state. The idea is to "gradually phase-out" the need for the relief, Schumer wrote, and avoid a fiscal cliff.

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