What the Biden Administration Plans for Unemployment Benefits in 2021

There are 9 million fewer workers in the United States than there were one year ago. The COVID-19 pandemic has wreaked havoc on employment in the United States. Women and people of color have had to deal with the biggest impact of job losses. The Biden administration says that more unemployment benefits could be on the way. Now that the impeachment trial of the former president has come to a close the House of Representatives and Senate can reconvene in order to hash out a COVID-19 pandemic relief package.

About What Is Currently Proposed

President Biden proposed a $1.9 trillion economic relief package in his efforts to mitigate the damage on American families and businesses. The proposed legislation would increase the amount of unemployment compensation jobless workers can receive each week. It would also extend the benefits period by several months. The exact amount and duration of the extra benefits are unknown as of February 14.

Comments from Speaker of the House Pelosi

Madam Speaker Pelosi, a Democrat from California, expects that the bill will be signed into law by the middle of March. The Democrats will have to pass it using a budget reconciliation maneuver, which is exactly how the Republicans passed their large tax breaks a few years ago. A simple majority is all that is required to pass legislation through budget reconciliation, and the Democrats have that.

What Economists Think the Bill Will or Should Include

Economists expect that the Democrats will increase unemployment benefits by at least $400 per week. They think the benefits will be extended through the end of August. This is around the time when most Americans should have had at least one COVID-19 vaccine if they want to get one.

Why the Extra Benefits Are Needed

Extra unemployment benefits were provided under a budget relief package signed into law by the former president in December. Those benefits are slated to end by the middle of March for some workers and the middle of April for the rest. Without another relief package, about 11 million Americans would run out of unemployment compensation by April 11.

What the Democrats Have Proposed

President Biden proposed increasing unemployment compensation by $400 per week. That would increase the average worker's weekly compensation to about $739. President Biden wants the benefits to be extended through the end of September. There is a draft proposal in place that is similar, and it would have the benefits ending on August 29.

When the Benefits Would Start

The $400 subsidy for weekly unemployment compensation would start after March 14 if the proposal currently in the House of Representatives is passed. It would pick up where the current $300 subsidy ends. There would not be any retroactive payments. Senator Ron Wyden, a Democrat from Oregon, wants a larger subsidy of $600 per week. He said he is going to fight to get a higher subsidy.

What the Republicans Say About the Benefit

Nearly all Republicans have been opposed to providing a $600 weekly subsidy for people who are unemployed. The CARES act provided that amount for four months, from March through July 2020. Larger benefits would discourage people from finding a job, argue Republicans. This could raise the rate of unemployment and slow the nation's economic recovery.

Why Economists Say the Subsidy Won't Wreck the Recovery

Economists say that employment increased during the time that Americans received the $600 unemployment subsidy. This information was released on February 10 in a study by economists at the University of Chicago. The economy has gotten better since then. More benefits might be a disincentive to go to work, say a few economists. They argue that the disincentive effect will be greater in 2021 than it was in 2020. Even so, they think that there should be a subsidy provided to unemployed Americans. The labor market is still distressed. One economist said that the subsidy should be phased out as the number of Americans who are vaccinated against COVID-19 increases.

Democrats Don't Need Republican Votes on a Budget Reconciliation

Democrats don't have to compromise with Republicans on this budget reconciliation bill. It only needs a simple majority to pass. If the Democrats add a line about increasing the minimum wage to $15 per hour, several moderate Democratic senators and representatives said this could sink the bill's chance of passing.

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