US Treasury Secretary Steve Munchkin excluded the possibility of extending the $600 per week employment benefits for Americans during the pandemic.
In an interview with the ABC’s “This Week” on Sunday, Munchkin stressed that many unemployed US citizens were being “overpaid” and had no incentive to return to the job market.
According to him, the unemployment benefits are supposed to be wage replacement; therefore, they should be linked to some percentage of wages and not a flat fee. He explained that the government’s outdated computer systems were the reason for having a flat fee now.
The Treasury Secretary noted that Republicans targeted “enhanced unemployment,” but did not want to disincentivize people to return to work. He said that the government wants to fix the issue with people who are paid more to stay home than to work.
Mnuchin’s comments come after ongoing debates between Democrats and Republicans over the extension of the federal unemployment benefits package, which expired on July 31.
The Republicans strongly disagreed with prolonging the deadline, saying that the government is paying people “to stay at home.” Democrats, including House Speaker Nancy Pelosi, objected their statements, calling the $600 “vital for America’s working families.” The talks are underway.
Contrary to what Mnuchin said, a recent study by Yale University found ”no evidence” that the government relief package decreased employment.
The researchers found out that people who were eligible for benefits started working again at a similar or even quicker rate than others who did not collect enhanced benefits.
Prof. Joseph Altonji, a co-author of the report, said that the data did not find a correlation between benefit generosity and employment paths after the CARES Act was approved.
Moreover, the academics concluded that even workers who received larger increases in their unemployment package compared to their wages did not experience greater declines in employment once jobs were back.
The White House resistance to renew the financial aid is a huge milestone in the new COVID-19 relief package being negotiated in the Capitol. The significant decrease in income combined with the disappearance of the government benefits is set to result in mortgage defaults and evictions for nearly 20 million Americans. In addition, the lack of consumer spending would also affect businesses and the economy.
What do you think? Do you agree or disagree with Mnuchin’s statement that many Americans were overpaid and were not motivated to resume work?