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Republican senators are ramping up warnings that the recent boost in jobless benefits amid the coronavirus crisis will “push unemployment higher,” as many individuals are able to collect more money through the program than they made while on the job.
Under the “Phase 3” economic stimulus package passed last month, also known as the CARES Act, Congress provided $250 billion to extend unemployment insurance to more workers, and lengthen the duration to 39 weeks, up from the normal 26 weeks. The provision allowed for an extra $600 to be provided a week for four months to those losing their jobs amid the crisis.
But Sen. Ben Sasse, R-Neb., blasted the policy and warned that any attempt to extend those benefits in a potential “Phase 4” package could backfire and harm American businesses.
“Small businesses will struggle as long as unemployment pays more than work,” Sen. Ben Sasse, R-Neb., told Fox News. “The real world doesn’t look anything like their progressive talking points, but that’s not going to stop Bernie Sanders and Nancy Pelosi from doubling down on sloppy policy.”
Already, The Wall Street Journal reports that about half of U.S. workers can earn more with these jobless benefits than they did while working -- a factor that could hurt efforts by some businesses to reopen.
Sasse, as well as Sens. Lindsey Graham, R-S.C., Tim Scott, R-S.C., and Rick Scott, R-Fla., warned about exactly this scenario last month, when they sought to limit the benefit to 100 percent of pay before the CARES Act passed. The amendment was defeated in the Senate.
“We should take care of workers who lose their jobs, and a workable compromise could be unemployment up to 100% of pay during this emergency,” Sasse explained, adding that Labor Secretary Eugene Scalia “needs to work on a solution with state unemployment agencies.”
“I’m going to keep fighting for pro-worker, pro-recovery benefits that don’t push unemployment higher,” Sasse told Fox News.
Graham echoed that same sentiment. A Graham aide told Fox News that they have heard this concern repeatedly in their conversations with the business community.
“I want to make people whole who lost their job through no fault of their own,” Graham said. “But I don't want to pay people more not to work than to actually go to work.”
Graham has warned that the CARES Act “created a system that can provide many hourly employees a 50 percent or more increase in wages if they choose unemployment instead of staying on payrolls.”
Graham urged lawmakers to review the money appropriated to help state unemployment systems under “Phase 4 negotiations.”
“The Sasse amendment would have ensured we do not pay people more to be on unemployment than to actually get up and go work a 40 hour a week job,” Graham said in a statement. “If we don’t change this provision, we will have created a great incentive for people to leave the workforce.”
He added: “Under the current setup, some people’s wages could actually be temporarily increased by 150 percent by leaving the workforce. This is a perverse incentive which needs to be fixed.”
Sen. Rick Scott also told Fox news that his office is hearing from small businesses across the nation "who want to re-open their doors, but can;t because their employees are getting paid more by the federal government through the CARES Act to not work than they would receive if they were back on the job."
"Senator Scott supports expanded unemployment benefits, but Congress shouldn't create a pervasive incentive not to work," a Scott aide told Fox News. "This hurts our economy and our small businesses, and is exactly what Senator Scott was hoping to avoid with his amendment to the CARES Act. Moving forward, everyone should be focused on how to re-open the economy and safely get Americans back to work."
The CARES Act included a new “Pandemic Unemployment Assistance” program, which extends unemployment benefits to self-employed, independent contractors, those with limited work history, and other individuals not traditionally eligible for unemployment benefits who are unable to work as a direct result of COVID-19.
The stimulus package also provided an additional 13 weeks of unemployment compensation to individuals who have exhausted their regular unemployment benefits, as well as a supplemental payment of $600 per week for up to four months.
The average state already gives out $463 per week in unemployment benefits. When combined with the new $600 per week, the average unemployed individual can collect $1,063 per week—the equivalent of more than $26 an hour, or $55,000 per year.
Unemployment benefits traditionally require a worker to be laid off to collect benefits, and so many people are not yet aware that the relief bill allows a person to quit and still collect as long as they “self-certify” that they had to quit because of the coronavirus situation. The relief bill says that staying home to be the primary caretaker of children who are out of school counts as one automatically valid reason.
And while traditional unemployment benefits pay out based on an employee’s previous income, the new benefits pay a flat $600 extra per week even if a worker’s previous job paid less.
The generous payments are temporary, however. They are scheduled to last for four months, ending July 31.
But Democrats, like House Speaker Nancy Pelosi, D-Calif., have already signaled they intend to push for an extension to that date, noting that a “Phase 4” package “must go further... extending and strengthening unemployment benefits.”
Meanwhile, the inspector general for the Department of Labor said last week that it had “significant concerns” about the “unprecedented demand” for unemployment benefits amid the crisis, highlighting issues related to state preparedness and the risk of fraud among those receiving relief.
The inspector general noted that the risk of fraud and improper payments is “even higher” under the new Pandemic Unemployment Assistance program because claimants “can self-certify” their unemployment qualifications. The inspector general urged the Department of Labor to establish methods to detect fraud and recover those improper payments.
Fox News' Maxim Lott contributed to this report.