3 Reasons Why Americans Need More Federal Aid

3 Reasons Why Americans Need More Federal Aid

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On Friday, he is expected to sign additional executive orders, providing further assistance to working families.

Democrats have made it clear that another comprehensive economic relief bill, including $ 1,400 stimulus payments, will be their first legislative priority.
Economists, including Janet Yellen, Biden’s choice for Treasury secretary, say additional aid is needed to stem the bleeding before the federal government tries to rebuild the economy. Here are three reasons:

1. The economy is still getting worse

During the first week of the year, the number of new people who signed up for unemployment insurance exceeded 900,000 for the first time since August. Claims fell only slightly in the past week and remain at the highest level in months.
The US economy is down 9.8 million jobs compared to its pre-pandemic level. There are more jobs than lost in 2008, after the financial crisis.

Although most high-paid workers have seen their jobs return in the summer, the unemployment rate for low-paid workers remains stubbornly high.

Nearly 25% of workers who earned less than $ 27,000 a year remain unemployed, according to Opportunity Insights, a Harvard University project that tracks the recovery. For comparison, the general unemployment rate is around 6.5%.

2. Things can get even worse before they get better

The increasing number of Covid cases and deaths, as well as renewed local blocking measures, are making it harder for companies to survive.

The number of small, open and operating small businesses fell by almost 30% compared to pre-pandemic levels, continuing to fall during the fall.

The winter climate is making it more difficult for companies like restaurants to attract customers to outdoor patios.

And economists warn that more jobs may be lost in the coming months, despite the start of the vaccine launch.

3. Relief from the traditional stimulus will not work during a pandemic

Traditional stimulus programs, such as one-time direct payments or tax credits, are not as effective when the recession is caused by a public health crisis, said John Friedman, professor of economics at Brown University and co-director of Opportunity Insights.

People still won’t go out to eat or spend money on other entertainment if they don’t feel safe, for example, no matter how much money is in their bank accounts – and that also means they’re not buying as many new clothes or other items, otherwise.

“Instead, we need to help those most affected by the pandemic to get through the next six to nine months until the public health crisis passes. So we can get the economy going again, ”said Friedman.

He pointed to the increase in unemployment benefits, food stamp benefits and rent assistance as programs that can palliate people now.

Although Biden has already renewed eviction protections, he will need Congress to extend federal unemployment benefits and increase food stamps. He also asked lawmakers to provide money for daycare centers, restore paid emergency leave benefits, create new subsidies for struggling small businesses and subsidize health insurance for those who lost their jobs.

CNN’s Anneken Tappe contributed to this report.

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