• That's not the case for three reasons: Wages aren't climbing, job postings are down compared to before the pandemic, and growth in payroll employment surpassed expectations in May and June.
  • Trump and Republicans oppose extending the beefed-up payments. Without a replacement, 33 million jobless workers could see their incomes plummet by at least half overnight.
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Just over two weeks remain before the $600 weekly boost in federal unemployment benefits are set to expire. Without an extension or replacement in place, millions of jobless people collecting those payments could face a 50-75% paycut virtually overnight.

Many Republicans argue the boost is disincentivizing employees from returning to work since many jobless people are earning more from the government than they did at their old jobs. A study released in May from the University of Chicago found that benefits payments exceeded previous wages for two-thirds of workers on unemployment.

As of June 20, the latest data from the Labor Department indicates 33 million people are receiving unemployment benefits. Despite those figures, President Donald Trump has touted the last two months of job gains, calling the economy "a rocket ship" and opposing the extension of the supplementary payments.

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But many economists say the $600 benefit is not a significant drag on the economy overall. Ernie Tedeschi, a former economist in the Obama administration, laid out three key reasons why in an interview with Business Insider:

  • May and June had robust growth in payroll employment that blew past expectations, and the beefed-up benefit didn't slow it down. "We've had two months of above-expectations jobs growth," he said.
  • In a healthy labor market, firms would increase wages to compete and hire workers. Instead, wage data indicates there aren't broad hikes underway.
  • The number of job openings is still significantly lower compared to February, and employers are not casting a wider net by posting more jobs.

The $600 plus-up, Tedeschi said, is "not a binding effect on the economy overall" when it comes to dampening employment growth.

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The $600 benefit hasn't hurt the job market

In March, Congress implemented a $600 federal supplement to unemployment checks to tide over millions of workers confronting historic and abrupt job losses. The April jobs report released in May gauged the economic devastation: 20.5 million jobs vanished due to the pandemic, sending the unemployment rate skyrocketing to nearly 15%.

Then reports in May and June showed 7.3 million jobs added to the economy, mainly the product of states loosening lockdowns and allowing furloughed employees to return to work. The unemployment rate has since ticked down to 11%, though the economy is still 14.7 million jobs below where it was in February.

Meanwhile, experts say the economy is getting scarred from the pandemic, with permanent job losses climbing to 2.9 million so far.

Adam Ozimek, chief economist at Upwork, a website for freelancers, said the benefit is certainly keeping many low-paid workers at home, given their ability to earn more from an unemployment check than the one from their job. He shared a chart on Twitter illustrating the slow rebound of job postings since the economy cratered in April.

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"I have no doubt labor supply is being reduced by UI right now. Many can make more by staying home," Ozimek said in a recent tweet . "However, if weak demand means you only need to recall 25 out of 100 laid off workers, it doesn't matter if 25 don't want to work. Not a binding constraint yet."

He went on: "At some point, it will be a constraint. Unlikely to be so with 15 million out of work."

There are also still more unemployed people than available jobs. The latest data from the Bureau of Labor Statistics shows there are 3.9 jobless people for each open position in May.

Tedeschi said the boosted benefit would hold back employment growth if the economy was healthy. But that's not the case at the moment.

"The reason why the $600 wouldn't be a binding constraint on the labor market, you'd have to be close to full employment. We're very clearly not," he said. "Moreover, there's a pandemic going on."

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