Coronavirus unemployment bump is ‘income expansion,’ pays these workers more than their jobs

Some businesses are having a hard time getting employees back to work

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More than 2 million additional workers filed jobless claims last week – but some of them may stand to net a bigger paycheck thanks to expanded unemployment benefits, depending on what industry they work in.

Under the CARES Act, eligible Americans who are out of work entirely or underemployed because of reasons related to coronavirus can receive an additional $600 a week for up to four months.

While the policy aims to have an income replacement rate of about 100 percent, a new study from three researchers at the University of Chicago found that benefits for 68 percent of workers would exceed earnings. Additionally, the median replacement rate for about 20 percent of people is 134 percent.

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“The CARES Act provides income expansion rather than replacement for most unemployed workers,” the researchers wrote.

The maximum amount of unemployment individuals can receive each week varies from state to state. In New York, where the virus has taken a big toll on residents, the maximum benefit is $504, so the max payment is $1,104 under the new program.

In New Jersey, the maximum payment with the extra $600 is $1,313, and it is $1,390 in Washington state.

For many restaurant workers, the federal payment means they could make more not working. The average restaurant worker earns around $500 a week.

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Here’s a look at some other industries where workers can earn more from expanded unemployment insurance, as compiled by FiveThirtyEight:

Food services

Estimated income replacement rate: Nearly 200 percent

Medical assistants

Estimated income replacement rate: More than 150 percent

Sales and retail

Estimated income replacement rate: Nearly 150 percent

Transportation

Estimated income replacement rate: About 125 percent

Construction

Estimated income replacement rate: About 125 percent

Teachers

Estimated income replacement rate: More than 100 percent

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The unemployment policy, which Democrats are looking to extend, has already become a source of contention as lawmakers look at potentially passing another stimulus package.

House Minority Leader Kevin McCarthy, R-Calif., said this week that the GOP is looking at ways to fix the fact that small businesses “are being challenged to bring employees back to work.”

Meanwhile, Democratic Rhode Island Sen. Jack Reed announced new legislation Monday to extend the bump in benefits, which are scheduled to expire on July 31, through the end of the year.

It’s a problem for companies seeking complete loan forgiveness through the Paycheck Protection Program, which broadly requires businesses to retain staffing levels in order to have the loan forgiven.

More than 38 million Americans have filed for unemployment over the past 9 weeks. The unemployment rate jumped to 14.7 percent last month, levels not seen since the Great Depression.

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