When jobless Americans began receiving the extra $600 a week in unemployment benefits in April, critics of the program held that it would discourage people from returning to work, because two-thirds of recipients received more money from their jobless benefits than they did from their jobs.
But in reality, more than half of the jobless workers who received these enhanced benefits under the CARES Act returned to work before the benefits expired at the end of July, according to research published Thursday by the JPMorgan Chase Institute JPM, +1.42%.
This finding is based on an analysis of more than 44 million households with a JPMorgan/Chase checking account from January 2019 through November 2020.
The researchers also found that after the $600 a week enhanced benefit expired in July, the rate of jobless Americans returning to work did not increase significantly. And three weeks after the supplemental benefit expired, the rate of people on unemployment returned to July levels.
However, without the extra $600 a week benefit, Americans drew out half of the savings they built up when the $600 was in effect, prior JPMorgan Chase Institute research found. At that time households experiencing unemployment also increased spending relative to employed households.
For every dollar of supplemental unemployment insurance, the median unemployed family spent between $0.29 and $0.43 more than they otherwise would have, according to the report published Thursday.
“This underscores the importance of jobless benefits, both to families and the economy as a whole, as nearly half of people out of work today face long-term unemployment,” said Fiona Greig, Co-President of the JPMorgan Chase Institute.
More than 11 million jobless Americans are facing an unemployment benefits cliff if lawmakers don’t reinstate two CARES Act programs — the Pandemic Unemployment Assistance (PUA) program and Pandemic Emergency Unemployment Compensation (PEUC).
The PUA program allowed self-employed workers, freelancers, gig workers and independent contractors to collect unemployment benefits. It helps those who have exhausted their state unemployment aid.
Americans are also due to stop receiving the $300 a week supplemental unemployment benefit in mid-March absent of any legislative action.
It’s likely that jobless Americans will continue to receive enhanced unemployment benefits given that it’s included in President Joe Biden’s $1.9-trillion stimulus package proposal, as well as in a counter stimulus proposal supported by at least 10 Republican lawmakers.
Biden’s package calls for increasing the enhanced benefits to $400 per week through September. The Republican proposal calls for keeping the $300 per week through the end of June.