Republicans want to replace extra $600 unemployment with 70% replacement wages — but that could take months


What’s next for Americans who may have received their last unemployment-insurance checks that included the extra $600 a week from the CARES Act?

Well, that depends on how well-equipped their states’ employment offices are.

On Monday, Senate Republicans unveiled a new stimulus package, dubbed the Health, Economic Assistance, Liability Protection and Schools Act, or HEALS Act, that calls for implementing supplemental weekly unemployment benefits equal to 70% of a workers’ prior wages with a $500 cap.

But implementing that would take a minimum of eight to 20 weeks for state labor departments, according to a memo to members of Congress written by the National Association of State Workforce Agencies, a nonprofit and nonpartisan trade group.


The Republicans’ HEALS Act would allocate some $2 billion for state workforce agencies to upgrade their computer processing systems.

Until states can implement that, the Republican plan calls for two months where unemployment beneficiaries would receive a flat $200 a week on top of what they would otherwise receive at the state level.

Labor Secretary Eugene Scalia said, “the great majority [of states] indicated they can get this done within eight weeks.” States can apply for a waiver from the Department of Labor “if they’re not able to achieve it” within eight weeks, he said in a CNBC interview on Tuesday.

Opinion: Killing the $600 unemployment benefit is a boneheaded move

The HEALS Act would allocate some $2 billion for state workforce agencies to upgrade their computer processing systems.

Scalia said that one proposal put forth by Senate Minority Leader Chuck Schumer and Senator Ron Wyden, a Democrat from Oregon, which ties unemployment benefits to state unemployment rates, would have “required more changes by states.”

The time lag to switch over to the 70% wage-replacement payout formula is related to the fact that so many people receiving unemployment benefits are self-employed or are gig workers, said Wayne Vroman, an economist at the Urban Institute, a left-leaning policy think tank.

Under the $2 trillion stimulus package, known as the CARES Act, these types of workers became eligible for unemployment benefits. Without the CARES Act, they would have been ineligible.

Unlike traditional salaried workers, self-employed and gig workers often have volatile incomes that are not automatically reported to state workforce agencies.Therefore, state workforce agencies “would have to request that information from an applicant from their 1099 tax form,” Vroman said.

(A 1099 tax form is often used in place of a W2 form to report earnings to the government for a person who is not an employee, according to the Internal Revenue Service.)

“Those forms would serve as a source of income but they are much more difficult to get a hold of,” he said, and would likely require state workforce personnel to speak individually with unemployment beneficiaries.


‘The Republican proposal on unemployment benefits, simply put, is unworkable. It will delay benefits for weeks if not months as we slide into a greater degree of recession.’


— Senate Minority Leader Chuck Schumer

If unemployment benefits are distributed based on claimants’ prior wages, “new capacity would need to be created to receive and analyze earnings data for self-employed workers,” the National Association of State Workforce Agencies said.

But many states like Florida are already struggling with processing jobless claims in a timely manner. As a result, more than 55,000 Floridians who were eligible missed out on the $600 a week boost in unemployment benefits, CNBC reported.

The Department of Economic Opportunity, which administers unemployment benefits in Florida, recently cut nearly 1,000 contracted call center workers.

The agency told MarketWatch it is “actively monitoring the discussions being made by Congress to possibly extend Federal unemployment benefits and will work diligently with the U.S. Department of Labor to serve Floridians.”

Vromen suspects that states which supplement their workforce agencies with more funding on the state level as opposed to relying on federal funds would adjust more easily to the 70% wage replacement formula if the Republican proposal is signed into law.

Also see: Republicans and Democrats both want another round of stimulus checks — but here’s where they disagree

House and Senate Democrats hold that the Republican proposal for unemployment benefits unfairly penalizes Americans who are unemployed due to the pandemic. “If you’ve lost your job through no fault of your own Republicans want you to take a 30% pay cut,” Chuck Schumer, a New York Democrat, said Monday.

“The Republican proposal on unemployment benefits, simply put, is unworkable. It will delay benefits for weeks if not months as we slide into a greater degree of recession,” he said on the Senate floor.

Schumer and House Speaker Nancy Pelosi, as well as many other Democratic lawmakers, have been urging Republicans to consider the HEROES Act, a $3 trillion stimulus package House Democrats passed in May.

That proposal, among other things, would extend the extra $600 federal unemployment benefit to January 2021.

The Congressional Budget Office found that if these benefits were extended through January 2021, an estimated five of every six recipients would receive more in benefits than they would from working those six months.

Republicans say that would act as a disincentive for beneficiaries to return to work. Democrats however hold that there aren’t enough jobs out there for unemployed people to fill.



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Volkswagen to replace head of software division: Handelsblatt By Reuters


© Reuters. A logo of German carmaker Volkswagen is seen on a car parked on a street in Paris

BERLIN (Reuters) – Volkswagen (DE:) is replacing its head of software development, newspaper Handelsblatt reported on Sunday, as the German carmaker wrestles with the transition to electric vehicles.

The newspaper said Christian Senger, a former BMW manager who runs the recently founded Car.Software.Org unit, was to be replaced after clashes with the company and concern at software problems with the recent ID.3 and Golf 8 vehicles.

Senger was part of a network of external managers Chief Executive Herbert Diess had brought in to reform the company. Senger, after working on BMW’s i3 electric car, helped Volkswagen make its MEB electric car platform, a key pillar of its revival in the wake of a 2015 diesel cheating scandal.

The software post is one of the most important in the development of new-generation electric vehicles, which are far more reliant on computer power than the combustion engine that have been Volkswagen’s mainstay.

Volkswagen declined to comment on the report.

A management purge has already seen Andreas Renschler, a former Mercedes-Benz manager leave his post as head of the Traton Trucks unit, and Stefan Sommer, a former Chief Executive of auto supplier ZF, leave his post at VW.

Senger was also leaving his post as a member of the board of Volksagen’s core VW brand, the newspaper said, although it added that chief executive Herbert Diess was hoping he would stay with the company.

Volkswagen’s powerful staff council, led by Bernd Osterloh, have forced out cost-cutters at the company in the past. Wolfgang Bernhard, a former VW brand chief and Bernd Pischetsrieder, a former head of the Volkswagen Group, quit following clashes with labour leaders.

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Philip Morris says cigarette sales in many places could end in a decade and they’ve got a ‘safer’ product to replace them


Philip Morris International Inc. thinks the sale of cigarettes could come to an end in countries around the world in the coming years, but have no fear, because they’ve got another product ready to sell that offers a “safer” nicotine fix.

Philip Morris
PM,
+4.02%

and the Food and Drug Administration announced this week that the company’s IQOS “electrically heated tobacco system” has been given the green light to market as a safer alternative to cigarettes.

Now designated as a “modified risk” product, the company can promote these items “as containing a reduced level of or presenting a reduced exposure to a substance,” according to the FDA statement.

Philip Morris, the company behind Marlboro cigarettes, describes these alternative products as heating rather than burning tobacco, which a cigarette does. Burning tobacco, which reaches 600 degrees Celsius, “contains high levels of harmful chemicals,” according to the company’s website. The tobacco heating system (THS) heats tobacco to 350 degrees Celsius.

Read: After his latest firing, this cannabis entrepreneur raised $150 million, for a hemp venture — during a pandemic

“However, THS is not risk-free and delivers nicotine which is addictive,” the site says. Philip Morris has turned its focus to the IQOS product, with Philip Morris’ Chief Operating Officer Jacek Olczak saying at the Deutsche Bank dbAccess Global Consumer Conference last month that the company is committed to “working towards realizing [the] potential of this opportunity,” according to a FactSet transcript.

The development comes at a time when Philip Morris is preparing for the end of cigarette sales.

“I am convinced that it is possible to completely end cigarette sales in many countries within 10 to 15 years, but for that to happen, manufacturers and governments need to work in the same direction,” said André Calantzopoulos, chief executive of Philip Morris, in a letter to stakeholders published with the company’s report on its environmental, social and governance (ESG) efforts.

Calantzopoulos notes the “skeptical stakeholders” like international organizations and the media that “doubt that harm reduction through smoke-free alternatives is sound public health policy or argue that our purpose-driven strategy is nothing more than window dressing.”

He highlights other areas where advice to reduce a hazardous activity is accepted, such as lowering sugar intake for better health.

“I feel strongly that people who smoke cigarettes, the most harmful nicotine-containing product, should not be denied the opportunity to switch to better alternatives,” Calantzopoulos wrote.

In 2019, Philip Morris sold 706.7 billion cigarettes, down 4.5% from 2018, according to a June CFRA report. Over the next few years, CFRA forecasts that cigarette consumption will fall 3% each year.

Shipments of heated tobacco products, on the other hand, soared 44.2% to 59.7 billion units in 2019.

Watch:How to keep emotions out of your portfolio with systematic investing

There had been discussions about merging Philip Morris and Altria Group Inc.
MO,
+4.32%

, however those talks ended without a deal. This is a good thing for Philip Morris “given heightened regulatory and legal headwinds surrounding e-cigarettes in the U.S., as Philip Morris’ IQOS product underwent a lengthy FDA review process before getting the green light for sale in the U.S. in April 2019,” CFRA said.

CFRA rates Philip Morris stock buy with a 12-month price target of $95.

“Despite declining cigarette consumption in developed markets, we look for pricing gains and growth in emerging markets to support revenues,” CFRA said. “We think the launch of Philip Morris’ heated tobacco product, IQOS, will lead to market share gains and help offset cigarette volume weakness.”

The company reported earnings and revenue that beat expectations in the most recent quarter. The stock is down 15.1% for the year to date while the Dow Jones Industrial Average
DJIA,
+1.43%

has fallen 9.3% for the period.

See:This California legislator is taking on SmileDirectClub

While the cigarette business was hurt by restrictions imposed by coronavirus-related lockdowns and plummeting duty-free demand at global travel hubs, Olczak said on the April earnings call that device and heated tobacco sales were showing the potential to regain pre-COVID momentum.

Philip Morris’ goal now is to move into a “smoke-free future,” said Huub Savelkouls, the company’s chief sustainability officer, in a post on LinkedIn. Philip Morris has cut its cigarette portfolio by more than 700 SKUs (stock-keeping units) over the last four years and aims to move 40 million smokers of its cigarettes over to smoke-free products.

Savelkouls says engagement, including between the company and the investment community, is needed to achieve change.

“Making cigarettes obsolete can be achieved much more rapidly through inclusivity and openness,” Savelkouls wrote. “Our goals are really not that different and that is where the potential for creating impactful change lies: working together towards making the world smoke-free.”



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Will Google Replace Telenav? (NASDAQ:TNAV)


Telenav (TNAV) is a leading provider of location-based products and services for automobiles. Ford (NYSE:F) and General Motors (NYSE:GM) are their main customers, representing 55% and 18% of total revenue in FY2019, respectively. The big question that we have to ask is – will Google (NASDAQ:GOOG) (NASDAQ:GOOGL) replace Telenav? In September 2019, Google and General Motors announced that they are working together to install Google’s voice assistant and apps into GM vehicles beginning in 2021. Telenav’s stock promptly fell by 44.8% on that same day. Investors realize the potential impact and what this deal could mean for Telenav. Our analysis on the current state of affairs and dynamics of the infotainment industry lead us to believe that the sharp decline was unwarranted, especially seeing that the current price is 124.4% lower than its 52-week high. From our analysis, we believe that the company has more to offer and will stay relevant to continue working with their current partners. Investors with large risk appetites and long investment horizon could consider adding this stock to their portfolio.

Side Note: I will follow up on the firm’s financial analysis and projections, so follow me to keep updated.

Are Automobile Manufacturers Becoming Turtles?

First, let us tackle the issue with today’s infotainment market. The automotive industry is confronting a widening and unsustainable gap between software complexity and production capabilities. What this means is that OEMs are not able to produce software that match consumers’ demand. This resulted in security concerns as well with reports of hackers being able to access locks, brake systems, and dashboard displayers remotely via the cloud in several car models. History has shown that tech companies are way better suited to producing high quality software to serve customers’ needs best.

Source: McKinsey

How Far Along is Google?

Previously, Google (Android Automotive) was working with Volvo (OTCPK:VOLAF) (OTCPK:VOLVY) (under Polestar 2, an EV to compete with Tesla (NASDAQ:TSLA)) and Audi (OTCPK:AUDVF). To be fair, both the infotainment system and cars are prototypes starting production in 2020. In the latest partnership announcement, Google and Ford both mentioned that the contract is not exclusive, meaning Ford can continue working with Telenav. But we recognize that the threat is real and potentially disruptive to the current market because of Google’s advancement and innovation capabilities. Google’s system boasts the ability to allow consumers to adjust heat and turn off seat warmers in a vehicle via Google Assistant. The platform is designed to be customizable to suit different automobile styles. Many investors believe, with some merit, that it is inevitable for Google’s or some other tech giant’s infotainment system to be in every vehicle. Amazon (NASDAQ:AMZN) or some other cloud provider could swoop into the infotainment space with their software expertise and cloud solutions to dominate entire OEMs. However, as explained in a later section, we believe that this is an unlikely case.

When asked if Volvo could seek other solutions for other cars while retaining Android Auto on certain cars, Patrick Brady (head of Android Auto) explains it by drawing parallel to mobile phones.

“Yeah. I would say, by and large, though, that the carmakers… it’s not like back in smartphones, where you could afford, as a device manufacturer to have different phones running different systems. I think all the way back to, like, HTC in the early days. They had the HTC Touch or something running Windows, and they had a whole bunch of those, and they had their Android line. Carmakers generally don’t do that. Because the investment in these infotainment platforms is so high that doing multiple different versions of them just increases their cost, and R&D, and time to market, and maintenance, and everything, so they tend to kind of go all in on one. But, short version: no, the contracts aren’t exclusive.” – Patrick Brady

He explains that OEMs generally do not want to have a bunch of different infotainment systems across different cars because of the high investment and related costs. And we agree with him, but there is more to it than just expenses.

Empty Shell

Another factor that drives (no pun intended) OEMs is their long-term vision of being valued automotive leaders. OEMs want to avoid becoming a low-margin hardware producing factory that provides no additional value to customers. The second that happens, automobile brands will no longer have the same power and influence they have today. On the extreme end, we could even see tech companies catching up to the hardware production aspect and eventually taking over today’s OEMs. We would like to believe that this is unlikely due to the sophisticated expertise required to design and build an automobile. For example, we saw Apple (NASDAQ:AAPL) trying to build their own self-driving cars but failed and eventually shifted to focus on self-driving software instead. Given that OEMs are highly motivated to not become dinosaurs, a solution would be to band together. HERE is a map database owned by a consortium of OEMs including Audi, BMW (OTCPK:BMWYY), and Mercedes. In fact, HERE provides the map data for Telenav’s navigation solutions. We believe that it would be in Telenav’s best interest to work with Ford and General Motors to come up with other solutions. This would resolve the widening consumer expectance-solutions gap while protecting the value of OEMs, as OEMs now have indirect control and influence over these solutions. Jeff MacDuff at Inrix, a location-based data and analytics firm, agrees that automakers won’t want to give up this data.

“The best analogy… you don’t want to be the dumb pipe. You don’t want to be AT&T to the iPhone. The iPhone made telcos, for a consumer, largely irrelevant. If you’re a brand, BMW or Audi, that’s your customer and your data, and you want to use that data to delight that customer and have that customer attach.” – MacDuff

Tesla has proved that it is possible to deliver an incredible vehicle and software that meets the need of today’s consumers without working with Google or Apple. OEMs would strive to work towards replicating Tesla’s success.

Can Telenav Fulfill This Role?

The other important aspect of this equation is whether Telenav can deliver to be that solution provider which fits right in the sweet spot of advancing OEMs’ software while protecting their interests. We see this through the partnership with HERE (owned by a consortium of OEMs). The core products of Telenav are on-board navigation systems built into vehicles and navigation SDKs that enable clients to add mapping and location capabilities to their own on-board automotive applications. Let us look at Telenav’s strategy for the future to determine if Telenav can provide relevant solutions.

Source: Company Investor Presentation

There are 3 focus areas:

1) In-Car SW/Service: The company plans to release Full IVI VIVID, an aftermarket in-vehicle infotainment. The product will integrate internet-based entertainment services, including Alexa voice assistant, and integrated vehicle functions. In a bid to launch quickly and to reach a greater number of end users, the company announced a partnership with Alpine to offer the VIVID infotainment system via an USB stick that consumers can simply plug into any compatible systems. This would allow a greater number of customers to access the VIVID system in their existing cars, whereas traditionally, customers would have to wait for the system to come with new cars.

Source: Company Website

2) In-Car Commerce & Communication: The company plans to increase their number of partnerships to offer more services to consumers. For example, a customer could order a cup of coffee from the nearest Starbucks right off their system. The company recently partnered with motion auto to provide insurance services. These partnerships could provide additional streams of revenue for Telenav and OEMs.

Source: Company Investor Presentation

3) Road Intelligence: The company provides location and driving data-based analysis and statistics to clients such as GrabTaxi (GRAB), Toyota (NYSE:TM), Mercedes and Bosch.

Now, let us see how Telenav’s strategy might play out. First, we believe that the core business of Telenav will, as much as critics disagree, continue to grow with increasing adoption rates. Reason being this solution allows OEMs to produce their own navigation applications and solutions, therefore protecting their interest. From their latest quarterly report, Telenav has shown an increasing adoption rate for their solutions.

Source: Company Quarterly Report

As for the play on their infotainment system, we believe that it will work too. Now, we have to be very careful here; Telenav cannot completely disconnect with OEMs when coming out with their product as they would be categorized as a threat, similar to how Google is. We believe this possibility to be low; the company has built strong relationships with OEMs and should capitalize on their partnerships to further pursue solutions together. We predict that one of two things could happen in the future – VIVID or other solutions run in cars without drawing attention to their brand, or a consortium of OEM acquires Telenav. In either situation, Telenav stands to gain.

While we believe that not all strategies might play out the way the company hopes they do, Telenav should be able to compete in the market by staying relevant. The company has long realized that it has to keep innovating and has not been afraid to do so.

The Greater Threat…

On 7th January 2020, Ford and Garmin (NASDAQ:GRMN) announced a partnership that will see Garmin cloud-based navigation technology integrated into Ford’s next gen Sync infotainment system in the Mustang Mach-E EV. Telenav’s stock price fell by 8% on that same day. Now, we believe that this represents a greater threat to Telenav than Google does. The underlying motivation for this collaboration is that Ford needed someone to provide navigation solutions which encompasses EV-specific solutions such as looking for the nearest charging point. The way we see this is that Garmin will probably only be featured on Ford’s EV vehicles. We hope to see Telenav catching up in this space but understand the potential downside involved.

Recommendation

It would be a big bet that OEMs stick with Telenav instead of Google and that the collaboration with Garmin is only one-off. We recommend that only investors with enormous risk appetite invest in this company, otherwise investors should stay on the sidelines for now to see how this plays out. That being said, we believe that the downside might be already protected to a certain degree because of the sharp decline in September 2019; investors can place some put options to further protect their downside. I will follow up with this company to further delve into the firm’s financials and projections to determine investment entry and exit points. Follow me to receive notifications when that happens!

Other Thoughts

On the flip side, we might ponder, is there really a need to build a sophisticated system in the first place? Could it be the status quo of you to connect your phone to it while providing just the essential apps and services works best for all parties? If there are multiple drivers for the same car, security might be a concern if anyone can access our messages and personal details.

Co-existing might be a possibility. This might be harder to picture, but perhaps Google could integrate only some part of their ecosystem which would result in a slight improvement from today’s systems.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.





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The extra $600 Americans get in weekly unemployment benefits ends next month — here’s what lawmakers are proposing to replace it


Americans who have been laid off from their jobs because of the coronavirus pandemic have been able to collect an additional $600 a week in unemployment benefits on top of what they get from their state. That extra relief was part of the $2.2 trillion stimulus package known as the CARES Act.

But next month, if lawmakers fail to act, Americans who are out of work will see that $600 a week disappear from their unemployment checks.

The supplemental $600 Americans receive has been controversial, especially given that two-thirds of laid-off workers receive more money from their unemployment benefits than they did from their jobs. But at the same time, proponents of the extra $600 say that decreasing those benefits could cost the country even more jobs.

As lawmakers consider a new round of stimulus funding, there are three proposals on the table on how to replace the extra $600, two of which would allow unemployed Americans to receive additional funds on top of state unemployment benefits. But one calls for just the opposite — a return-to-work bonus.

Extending the supplemental $600 through Jan 2021


If these benefits were extended through January 2021, five of every six recipients would receive more in benefits than they would from working those six months, according to the Congressional Budget Office.

Last month, the Democratic-run House passed the $3 trillion HEROS Act, which would, among other things, extend the extra $600 federal unemployment benefit to January 2021.

The Congressional Budget Office found that if these benefits were extended through January 2021, an estimated five of every six recipients would receive more in benefits than they would from working those six months.

“If the benefit of $600 per week was extended, fewer than one in thirty recipients would receive benefits — generally the maximum amount in their state — that were less than 50% of their potential earnings,” the CBO report states.

Some have argued those generous benefits will keep people from seeking new jobs. But extending the $600 unemployment benefit would mean that Americans would have more money to spend in stores, and that could ultimately lead to lower unemployment, Heidi Shierholz, an economist at the Economic Policy Institute, a left-leaning think-tank based in Washington, D.C., said.

“It’s not true that there’s a pool of jobs out there that people would fill if they weren’t receiving unemployment benefits,” she said.

Related: ‘We are saving every penny we can’: What life could look like for this 66-year-old man when he loses all his unemployment benefits next month

For every dollar spent on unemployment insurance, there’s a multiplier effect leading to a 1.64 increase in GDP, according to a 2008 study published by Mark Zandi, chief economist at Moody’s Analytics
MCO,
+3.36%
.
Meanwhile, for every dollar spent on infrastructure projects, U.S. GDP could be expected to increase by a multiple of 1.59.

Senate Majority Leader Mitch McConnell said last month that the HEROS Act “reads like the speaker of the House pasted together random ideas from her most liberal members and slapped the word ‘coronavirus’ on top of it.” He also referred to it as a Democratic “wish-list.”

But House Speaker Nancy Pelosi said last week that she thinks Senate Republicans will “catch the spark,” and that their “their tone is changing.”

A sliding scale of unemployment benefits tied to state unemployment rates

Unlike the HEROS Act, one Democratic proposal which has bicameral support calls for additional unemployment benefits that are tied to state unemployment rates.

The proposal, known as the Worker Relief and Security Act, would allow Americans to continue to receive the additional $600 benefit for as long as the national emergency or state emergency for COVID-19 is in effect. Once the national or state emergency is terminated, jobless Americans would receive benefits based on their state’s unemployment level.


‘We continue to push for inclusion of automatic stabilizers in relief legislation, and I feel it is a top priority because it would help to prevent some of the political obstruction that unnecessarily prolonged the Great Recession.’


— Rep. Don Beyer, a Virginia Democrat and sponsor of the Worker Relief and Security Act

For instance, in states where the total unemployment rate is below 7.5%, unemployed Americans would be eligible to receive $350 in weekly benefits on top of state unemployment benefits. After 13 weeks, if they’re still unemployed, they would receive an additional $200 a week.

“The goal of the Worker Relief and Security Act is to prevent political gridlock from interfering with relief efforts by tying financial support for workers to public health and economic conditions,” said Rep. Don Beyer, a Virginia Democrat who is a sponsor of the bill and vice chair of the Joint Economic Committee.


‘Unemployment benefits should always be pegged to economic conditions.’


— Michele Evermore, a senior policy analyst at the National Employment Law Project

“We continue to push for inclusion of automatic stabilizers in relief legislation, and I feel it is a top priority because it would help to prevent some of the political obstruction that unnecessarily prolonged the Great Recession.”

This plan is the most logical, said Michele Evermore, a senior policy analyst at the National Employment Law Project, an advocacy organization focused on workers’ rights.

“Unemployment benefits should always be pegged to economic conditions,” she said. When the CARES Act passed in March, the economic impacts of coronavirus “didn’t seem like it would go on as long as it has or be as bad as it is.” So at that time, it seemed reasonable to provide the additional $600 through July. But even though 2.5 million workers went back to work last month, more than 21 million Americans are out of work, which is a sign that additional support is needed, Evermore said.

Also see: Some Americans who got laid off are going back to work — here’s which sectors are rehiring

Former Federal Reserve Chairmen Ben Bernanke and Janet Yellen also support Beyer’s proposal.

“Such an approach delivers help quickly and automatically as needed, without Congress having to act, and likewise winds down extra assistance as conditions improve,” Bernanke said. “This approach would not only help the unemployed in a timely way, it would also tend to stabilize the broader economy by increasing purchasing power in times of high unemployment.”

“It’s essential to support an economic recovery,” Yellen said. “The Worker Relief and Security Act is important because it guarantees that the CARES Act’s critical unemployment benefits will remain in place for however long they’re needed.”

A return-to-work bonus

The most recent unemployment report was surprisingly positive and showed that 2.5 million Americans had gone back to work — a sign that there are more job openings as states reopen parts of their economy. Extending the $600 weekly benefit past July would disincentive Americans from returning to work if they receive more money from remaining unemployed, says Sen. Rob Portman, a Republican from Ohio.

He’s proposing a back-to-work bonus, which would provide an additional $450 a week for Americans who return to work.

“Not only is the return-to-work bonus proposal the right policy in terms of incentivizing people to safely return to work and allowing businesses to reopen, but it could also benefit the American taxpayer through significant cost savings compared to the current money we’re spending on the CARES Act unemployment benefits,” Portman said in a statement to MarketWatch.


‘We need to be sure that there’s no financial disincentive for these individuals to get back into the workforce when those jobs become available to them again.’


— Sen. Rob Portman, a Republican from Ohio

“Moving forward, it is critical that we have a workforce that’s ready to step into their old jobs or newly available jobs now that the economy is safely reopening,” Portman said previously.

“Given that more than 15 million unemployed Americans are categorized as ‘temporary layoffs,’ we need to be sure that there’s no financial disincentive for these individuals to get back into the workforce when those jobs become available to them again.”

National Economic Council Director Larry Kudlow said that the Trump administration is looking “very carefully” at Portman’s proposal, which Portman said he plans to introduce more formally this week.

Beyer said this proposal “inherently misunderstands the root cause of unemployment: a deadly pandemic, and also fails to look ahead to the looming demand crunch which will fuel new rounds of job cuts.”

The return-to-work bonus could end up incentivizing people to take “the wrong jobs,” Evermore said. “People will take the first job they get,” she said, which could mean settling for a job that pays less or one for which they’re overqualified.



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