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Relief Package Could Cause High Unemployment Notwithstanding Economic Growth
May 31, 2020
With the US Congress debating another relief package, and approximately 35 million out of work, a new study from the University of Chicago shows how generous (or not) the added unemployment benefits were in the initial stimulus bill addressing the crisis. Two-thirds (68%) of jobless workers bring home more money from their state unemployment insurance and $600 weekly supplement from the feds than they would on the job. One in every five eligible workers receive benefits that were at least double their lost earnings, added the researchers. The median earnings replacement rate was 134% of lost wages, they estimated. In every state, the median earnings replacement rate exceeded lost wages, ranging from 129% in Maryland to 177% in New Mexico. The supplemental $600 weekly benefits were one part of the $2.2 trillion CARES Act that also included direct $1,200 checks, and potentially forgivable business loans. The additional jobless benefits expire at the end of July. The study, distributed by the National Bureau of Economic Research this week, said the benefit was a “substantial income expansion” for lower income workers, but pointed out that many workers might have also lost health insurance when they lost their wages.
If there’s one thing you can count on even during a pandemic, it’s trash talk between the U.S. and China. The world’s two biggest economies ramped up their hostilities this weekend across really every issue you can imagine, from trade to telecommunications. The Chinese Foreign Minister said aggressive U.S. politicians are pushing the nations into a “new Cold War.”
May 31, 2020
With the US Congress debating another relief package, and approximately 35 million out of work, a new study from the University of Chicago shows how generous (or not) the added unemployment benefits were in the initial stimulus bill addressing the crisis. Two-thirds (68%) of jobless workers bring home more money from their state unemployment insurance and $600 weekly supplement from the feds than they would on the job. One in every five eligible workers receive benefits that were at least double their lost earnings, added the researchers. The median earnings replacement rate was 134% of lost wages, they estimated. In every state, the median earnings replacement rate exceeded lost wages, ranging from 129% in Maryland to 177% in New Mexico. The supplemental $600 weekly benefits were one part of the $2.2 trillion CARES Act that also included direct $1,200 checks, and potentially forgivable business loans. The additional jobless benefits expire at the end of July. The study, distributed by the National Bureau of Economic Research this week, said the benefit was a “substantial income expansion” for lower income workers, but pointed out that many workers might have also lost health insurance when they lost their wages.
If there’s one thing you can count on even during a pandemic, it’s trash talk between the U.S. and China. The world’s two biggest economies ramped up their hostilities this weekend across really every issue you can imagine, from trade to telecommunications. The Chinese Foreign Minister said aggressive U.S. politicians are pushing the nations into a “new Cold War.”
- Why the U.S. is angry with China: The Trump administration has faulted China for allowing the coronavirus to spread beyond the origin city of Wuhan. It’s also criticized a proposed law that would expand controls over Hong Kong.
- Why China is angry with the U.S.: The U.S. recently tightened restrictions on supplies to Huawei, citing national security concerns. It also added 33 more Chinese entities to a trade blacklist.
- Bottom line: When President Trump launched a trade war with China a few years ago, it was less about specific tariffs and more about larger geopolitical battles. Now the full measure of his resolve is apparent. From: Morning Brew
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