Extra unemployment money encourages people not to work in pandemic, economics chief says

Extra unemployment benefits are a “disincentive” for going back to work, a top Trump administration official says.

Larry Kudlow, National Economic Council chief, said Sunday on CNN’s State of the Union that the federal government’s $600 bonus to unemployment payments, which is part of its coronavirus relief efforts, is encouraging people not to go back to work and that he expects it to cease in July.

The $600 is available weekly to everyone receiving unemployment benefits and is in addition to payments from the state under the Coronavirus Aid, Relief, and Economic Security, or CARES, Act.

The extra benefits are expected to expire after July 31.

When asked on State of the Union whether those receiving the payments should expect them to stop in August, Kudlow said they’re a “disincentive” to go back to work.

“We’re paying people not to work,” he said. “It’s better than their salaries would get. That might’ve worked for the first couple of months.”

He said the payments will end in late July.

Democrats have pushed to extend the payments through January, but Labor Secretary Eugene Scalia said last week the Trump administration opposes an extension, the Associated Press reports.

He said the payments were “the right thing to do” but are no longer needed, according to the AP.

Last week, an additional 1.5 million Americans filed for unemployment, according to the Department of Labor.

Though job loss is still high in the U.S., the number of new jobless claims has continued to decline each week since peaking in mid-March, as more businesses begin to reopen with the loosening of restrictions.

But Democrats say unemployment will likely be “historically high” at least through the summer, per the AP.

The country is still reporting unemployment numbers not seen in decades.

The unemployment rate hit 14.7% in April and dropped to 13.3% in May, surging past the peak rate during the Great Recession. Unemployment is at its highest since World War II, the AP reports.

Kudlow said on State of the Union that the Trump administration is looking at a “reform measure” to provide “some kind of bonus” for going back to to work.

“But it will not be as large and it will create an incentive to work,” he said.

He said businesses and jobs are starting to come back and that the administration “doesn’t want to interfere with that process.”

CNN’s Jake Tapper pushed back, saying he had a hard time believing people would rather stay home than go back to work, and that for a lot of people, their jobs aren’t coming back.

“I think that’s a fair point,” Kudlow said. “I personally agree with you. I think people want to go back to work and I think they welcome the reopening of the economy and I think they’re anxious to get out and about. However, at the margin, incentives do matter.”