Job creator wants “Employment Assurance” incentive and payroll tax cut in next COVID-19 relief bill

SAN DIEGO (KUSI) – As Congress struggles to reach a compromise on a new financial rescue plan, the main sticking point is the supplemental federal unemployment aid, which provides $600 a week on top of whatever benefit each state provides.

The White House wants to replace the enhanced benefit with a payment that would vary by state but would combine with a state unemployment benefit to replace 70% of recipients’ previous income, likely with some cap for high-income earners. On average, state benefits are equivalent to 45% of workers’ former incomes.

Senate Republicans favor reducing the $600 to a flat payment of $200, possibly as a bridge to a 70% replacement system. The flat payment had been adopted in March because most states’ unemployment systems use antiquated software that cannot adjust individual payments using a percentage formula.

The Democratic-led House has already approved legislation that would extend the $600 through January. Research has shown that, counting the $600 a week in federal aid, roughly two-thirds of those out of work are receiving more money from their jobless benefits than they earned at their previous jobs. That conclusion has fueled Republican concerns that the extra aid has discouraged some of the unemployed from returning to work, potentially slowing the recovery.

Many small businesses have said the $600 weekly federal benefit has made it harder for them to fill jobs. But some unemployed people are reluctant to return to work because they fear becoming infected. And others have tried and failed to find any work.

One new finding suggests that the federal jobless benefit hasn’t broadly kept people from going back to work. In a paper released Monday, a group of economists and doctoral students at Yale University found that unemployed people with larger percentage gains in their benefits were no less likely to return to work than those with smaller increases.

President and CEO of Job Creators Network, Alfredo Ortiz, recently sent a letter to Senate leaders pushing a payroll tax cut and opposing an extension of unemployment benefits.  

The letter explains that while unemployment benefits were helpful in the short-term, they “dissuaded people from going back to work. We recommend that the Senate let extended unemployment benefits lapse and start a new program called Employment Assurance.”

Ortiz joined Good Morning San Diego to discuss the letter he wrote to congress.

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