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Congress must act now to extend enhanced unemployment benefits

Commentary
July 22, 2020By Audrey Mechling

One of the main engines that has kept the economy moving — that has prevented greater suffering during the coronavirus crisis — is about to be taken out of commission. Unless Congress takes action, unemployed Oregonians will stop receiving additional $600 weekly Unemployment Insurance (UI) checks.

At a time when coronavirus cases are once again surging and reopenings are being put on hold, Oregonians whose jobs have disappeared due to the pandemic will lose their enhanced UI benefits that have helped them make ends meet when the program expires on July 31. Congress must act immediately to expand this vital program that is aiding Oregonians and bolstering our economy.

The Federal Pandemic Unemployment Compensation (FPUC) program, the official name for the $600 weekly payments boost, has provided hundreds of thousands of laid-off Oregonians with additional income in the past months. These additional payments have made up the majority of UI payments going out to Oregonians. In a single week in June, FPUC payments put $134 million into the pockets of Oregonians. If these payments end, the amount of money circulating in Oregon’s economy will shrink.

FPUC payments have also helped keep poverty rates steady over the past months, rather than escalate as millions of Americans have lost their jobs. Multiple studies have found that because of the aid offered through the CARES act — including the FPUC payments, expanded UI eligibility, and one-time stimulus checks — the number of families living in poverty has not increased. If the FPUC is allowed to expire at the end of this month, many families will find themselves suddenly unable to put food on the table and make ends meet.

Despite the success of the program, some in Congress are hesitant to extend the FPUC payments, wrongly claiming that the additional payments dis-incentivize recipients from going back to work. Even during the best of times, having low UI payments is unlikely to encourage people to find work. During a pandemic, it is perverse to try to push people back into work by cutting off assistance. The record-setting job losses were largely caused by government-mandated shut-downs because working wasn’t, and still isn’t, safe. Paying people to not work in order to slow the spread of this virus doesn’t just make sense morally — it helps the economy.

Research shows that spending on Unemployment Insurance is an excellent way to stimulate the economy, as unemployment payments are likely to be immediately spent. Every dollar spent on UI can bolster spending by as much as $2. By one estimate, expanding the $600 weekly benefits through July of 2021 would support over 115,000 jobs in Oregon that would otherwise be lost.

Senator Ron Wyden of Oregon has released a plan that would tie the availability and amount of the FPUC payments to state unemployment rates. This proposal would ensure that Oregonians retain access to these additional payments as long as the economy is struggling. The $600 payments would remain until a state’s three-month average unemployment rate falls below 11 percent, and then would gradually decrease along with a declining unemployment rate. Tying relief measures to economic indicators, rather than arbitrary end dates, is smart economic policy.

Congress has only days to take action and extend these vital benefits that are keeping Oregonians afloat. Passing an extension of the FPUC before it expires must be a top priority.