More than 26 million Americans are currently collecting unemployment benefits, according to the Labor Department. Of those, over 13 million are relying on pandemic-related programs for benefits, as they would not normally be eligible.
But further stimulus package negotiations remain at a standstill, even as experts urge Congress to take action. More waiting could “lead to a weak recovery, creating unnecessary hardship for households and businesses,” Federal Reserve chairman Jerome Powell said on Tuesday.
That’s why unemployment benefits should be at the center of the next stimulus package, Kevin O’Leary, chairman of O’Shares ETFs and investor on ABC’s “Shark Tank,” tells CNBC Make It.
“I would like to see a $400 a week support for the next 14 months [for] anybody that’s unemployed,” O’Leary says. “If you’re unemployed because of the pandemic, we’ll support you with a few hundred dollars a week until you can find a job,” he adds.
O’Leary would support a $400 enhancement over the $600 previously provided under the Coronavirus Aid, Relief, and Economic Security, or CARES Act, which expired in July. “I would rather people have an incentive to work if they can find it, but I don’t want them to be in a great, painful space,” he says.
While there have been some reports of businesses unable to find employees because of the unemployment boost, a July report from Yale economists found that the extra $600 is not the primary reason people are, or are not, working. Instead, it comes down to the availability of jobs, the report authors said.
In fact, those with better unemployment benefits actually found more job opportunities than those without, the report found.
As for an additional round of stimulus checks, O’Leary says it is not necessary. “We don’t need the $1,200 check to everybody anymore because a lot of those people have now found work again,” he says.
However, that isn’t necessarily true. Each week, about 1 million Americans continue to file for unemployment benefits. And although first-time unemployment benefit claims hit 840,000 last week — the lowest level since the virus-induced shutdown in mid-March — that number is still worse than expected.
Michele Evermore, senior researcher and policy analyst for social insurance at the National Employment Law Project, agrees that a weekly $400 unemployment boost for 14 months would be helpful for those who need it most. “The great thing about unemployment is that it’s targeted to people who have lost income and who need to replace that income to maintain consumption,” she tells CNBC Make It.
“The $400 [unemployment boost] is less than $600, but if you could get a commitment to keep it in place for 14 months, that gives people [a] real ability to plan,” Evermore says. “Given that the average unemployment benefit last year was around $370, I think [$400] would be much better stimulus than a $1,200 check or money that goes to everyone.”
Other experts agree that continued enhanced unemployment benefits are crucial for economic recovery. “There are still something like 11 million people who have not gotten their jobs back,” and in turn, need support, Powell said during his Senate testimony on Sept. 24.
“Those people are able to spend now because of the checks that they got and because of the enhanced unemployment insurance that they got,” Powell said. “There’s downside risk probably coming if some form of that support doesn’t continue.”
Where things stand now
Along with many other provisions, the previous $600 unemployment boost instated by the CARES Act expired in July. As a result, jobless Americans will need to live off of their current benefits, which in some cases, is as low as $5 a week.
In August, the Trump administration enacted the Lost Wages Assistance program to offer some unemployed Americans a $300 weekly boost for up to six weeks, but many have not received it due to administrative delays. Plus, some states had already ended the program by the end of September.
And still, Congress has yet to agree on a second stimulus package.
On Thursday, president Donald Trump said that Republicans and Democrats were “starting to have some very productive talks” after his previous decision to halt negotiations until after the election. Trump urged for coronavirus relief and aid for airlines as part of an overall stimulus deal, but House Speaker Nancy Pelosi told reporters this would not happen without a bigger aid package. On Friday, Senate Majority Leader Mitch McConnell said Congress will likely not pass another stimulus package before the Nov. 3 election.
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Disclosure: CNBC owns the exclusive off-network cable rights to “Shark Tank.”