Dennis Jansen Speaks to KBTX News on New Stimulus Bill
Jul 28, 2020
Summary: As the second round-stimulus bill, dubbed the CARES Act II, moves closer to passing, Director Dennis Jansen spoke to KBTX on Monday, July 27, 2020 on the next set of proposed stimulus checks and why unemployment compensation is currently in the spotlight.
“The reason unemployment compensation payments are important is that you are replacing some portion of lost wages. And the general idea is that you’d like to replace a fair amount of lost wages, but not so much that you encourage people not to return to work. So, state-provided, or state-run, unemployment compensation benefits usually replace, it depends upon the state, but about 45% of your pay when you were employed, and so the unemployed get a little less than half of what they were earning,” said Jansen.
However, the last round of stimulus payments increased unemployment compensation significantly, and with some unintended consequences. Jansen said “The federal program, the federal enhanced benefits in the CARES Act I, were set at $600 a week, $2,400 a month – way more than what the states provided and were in addition to what the states provided. In fact, about two-thirds of the unemployed were receiving more funds, often significantly more funds, than they were receiving when they were working, or that their fellow workers were receiving who weren’t laid off. So, there is concern about the disincentive effects of the federal enhanced program.”
The flat $600 per week federal payment that was included in the original CARES Act is not likely to be continued. The latest proposals call for a total 70% replacement of prior earnings, which includes both state and federal payments.
“Whether that’s enough or not, that’s a bit of a political decision. I do think it’s going to be quite a shock for people who have been receiving $600 a week to go down, in the federal program, to be reduced to $200 a week… Do I think it’s enough? I don’t know. I have some trouble paying people more for not working than working, I must admit. Whether the replacement rate in this current recession should be 70% or, I think some have even proposed 100%, I think that’s a matter of some judgement and politics plays a big role there, too.”
See the full interview
on KBTX here.