The Impact of Additional Unemployment Insurance Benefits on Employment and Economic Recovery: How the $600-per-Week Bonus Could Backfire

By Drew Gonshorowski and Rachel Greszler of The Heritage Foundation.

"Congress’s creation of an additional $600 per week in unemployment insurance benefits allows a majority of Americans to earn more from unemployment than employment. Economic studies show that higher unemployment benefits translate into higher levels of unemployment claims and longer durations of unemployment, which translate into lost goods and services. Two Heritage Foundation economists estimate that the impact of the additional $600 bonus will cause 13.9 million more people to file unemployment claims and reduce GDP by between $955 billion and $1.49 trillion. To prevent unnecessary losses and to allow the economy to recover more quickly, policymakers should cap unemployment benefits at no more than 100 percent of workers’ wages and tighten eligibility requirements for claiming benefits to prevent misuse and abuse."