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Delta variant could fuel unemployment pay raises, experts say

An executive chef interviews a job seeker about hospitality employment during a job fair on June 23, 2021 in Torrance, California.

Patrick T. Fallon | AFP | Getty Images

According to some labor economists, the rapidly spreading delta version of COVID-19 could be the reason for Congress to end federal unemployment benefits in early September.

The rising Covid caseload, largely the result of more transmitted virus strains, threatens to undermine the US economic recovery at about the same time that federal benefits are about to expire, he said.

Local outbreaks could lead consumers – both vaccinated and unvaccinated – to curb personal activities like dining out at restaurants, and lead parents to stay home if some schools adopt distance learning in the fall , for example, said economists.

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“It’s certainly possible that there could be another round of economic contraction in some areas,” said Eliza Forsyth, an assistant professor and economist at the University of Illinois. “And the unemployment system will not be for the people the way it has been in the past year.”

Of course, this is a hypothetical scenario. And there has been little sign of political will to continue making gains after the September 6 end.

Nearly half the states, largely Republicans, have already withdrawn from federal unemployment programs months in advance, claiming benefits were preventing recipients from returning to work.

But the dynamic one Congress should consider is the recent Covid figures, believe some economists.

According to Arindrajit Dubey, professor of economics at the University of Massachusetts Amherst, “we should be thinking more about these what-ifs from now on.”

delta version

According to the Centers for Disease Control and Prevention, the average of new confirmed Covid cases in the seven days to July 14 exceeded 26,000, more than double the amount two weeks ago.

The CDC estimates that 58% of recent US cases were due to the delta variant, which is more contagious than other strains. In some areas, such as Iowa, Kansas, Missouri and Nebraska, the variant accounts for about 90% of new cases, according to the CDC.

White House Chief Medical Adviser Dr. Anthony Fauci said in June that the delta variant “currently poses the greatest threat to our effort to eliminate COVID-19 in America.”

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“I think most of our economic policy is based on the status quo of the pandemic,” Dubey said. “The economics of the pandemic are not necessarily over.”

unemployment benefits

The rising caseload was the reason Congress initially created pandemic-era benefits programs through the CARES Act in March 2020.

The unemployment system expanded significantly, providing assistance to people who had exhausted state benefits and who generally did not qualify for state aid, such as the self-employed, gig workers, and parents. who had to take care of the children at home.

However, economists point out that the current situation is different. Last year, COVID vaccines were not available; Now, about 60% of American adults are fully vaccinated. So far, the delta variant has been spreading largely among non-vaccinated individuals.

When the virus was spreading, people across the country began to reduce in-person interactions. I guess there’s no reason not to think it won’t happen again.

Eliza Forsythe

Assistant Professor and Economist at the University of Illinois

“If so, expand [unemployment] The program won’t be worthwhile,” said Michael Farren, an economist at George Mason University’s Mercatus Center. “You don’t need to expand the program, you just need more vaccinations.”

For example, Ferren said the expansion of federal benefits could be detrimental to the economy if the policy delays some workers returning to the labor force. The risk of businesses automating certain jobs also makes it harder for them to fill a role, he said.

But there are some groups, such as children under the age of 12, who may not get the vaccine even after being vaccinated, Dubey said.

Dubey said the outbreak is likely to be more localized in areas with relatively low vaccination rates. But in Los Angeles County, for example, officials said Thursday that the Delta variant causes masks to be required indoors regardless of vaccination status.

Dubey said such mitigation measures may make some residents, even those vaccinated, more cautious about visiting indoor restaurants, bars, cafes and movie theaters, which could lead to more layoffs. is.

“People across the country began to reduce in-person interactions at a time when the virus was spreading a lot,” Forsyth said. “I think there’s no reason not to think it won’t happen again.”

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