Add Federal Reserve chairman Jerome Powell to the ranks who believe the government should extend its historically generous unemployment benefits.
Speaking to the House Financial Services Committee during a virtual hearing Wednesday, Powell voiced his opinion that the federal government would be ill-advised to let expanded, coronavirus-related unemployment benefits expire this summer.
Such benefits were enacted through the $2.2 trillion coronavirus aid package known as the CARES Act, which extended unemployment insurance to groups of workers historically ineligible for them, such as part-time employees, independent contractors, and the self-employed. The CARES Act also bolstered state unemployment benefits with an additional $600 weekly payment provided by the federal government.
But with the $600 weekly payment provision due to expire at the end of July and no clear sign of an extension in the works, there are concerns that economic conditions could deteriorate for many Americans without the added support—a view which Powell said he agrees with.
“I would say it probably is going to be important that [the $600 weekly benefit] be continued in some form,” Powell told the committee. “I wouldn’t say what form, but you wouldn’t want to go all the way to zero on that.”
Powell was responding to a question from Rep. Jennifer Wexton (D-Va.), who noted that in her home state, the maximum weekly unemployment benefit is $370. “The extra money has been a huge relief to the over 822,000 Virginians who have filed for unemployment benefits since March 15,” Wexton noted.
While he agreed with Wexton’s assertion, Powell added that the U.S. economy “should see strong job creation between now and the end of July,” which would lead to lower unemployment and fewer Amercians being dependent on government benefits to make ends meet.
At the same time, the Fed chair acknowledged indications that many workers “are reluctant to go back [to work] quickly”—particularly those in lower-paying service jobs that require close contact with customers.
“It may partly be that the $600 is generous compared to what they make; we know that many of them weren’t making that much when combined with the other unemployment insurance,” Powell said. “But also, if it’s a service economy job and you’re very close to someone—it’s a barber shop, it’s a beauty parlor, it’s a nail salon—there’s also still reluctance on the part of workers to go back to work at all.”