Grassley at Hearing on Unemployment Insurance During COVID-19

Summary

The prepared opening statement of U.S. Senator Chuck Grassley of Iowa, Chairman of the Senate Finance Committee, at the hearing Unemployment Insurance During COVID-19: The CARES Act and the Role of Unemployment Insurance During the Pandemic on Tuesday, June 9, 2020. Grassley states that the CARES Act provides an additional $600 per week to those receiving UI and that the payments are poorly targeted, citing University of Chicago research and letters from constituents. The statement quotes the Congressional Budget Office that roughly five of every six recipients would receive benefits exceeding expected weekly earnings if the payments were extended. It lists other CARES Act policies, including an additional 13 weeks of benefits and funding for work sharing programs.

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June 09,2020

Grassley at Hearing on Unemployment Insurance During COVID-19

Prepared Opening
Statement by U.S. Senator Chuck Grassley of Iowa

Chairman, Senate Finance
Committee

Hearing on Unemployment
Insurance During COVID-19: The CARES Act and the Role of Unemployment Insurance
During the Pandemic

Tuesday, June 9, 2020

VIDEO

Welcome
to today’s hearing.

Before
we start, I think it’s important again to note what’s going on all around us,
and that is the acknowledgement of racial injustice that has gone on for far
too long in this country.

I
certainly support those who are speaking out and making their voices heard in a
peaceful manner to bring about change.

While
change does not always come easily, I want to remind those watching this
hearing today that change is possible.

In
December of 2018, the First Step Act, which I introduced, became law.

This
law is the most significant criminal justice reform law in a generation.

A
lot of people didn’t think it was possible. But we did it by working together –
it was a bipartisan effort.

We’re
also working together in other ways to address racial disparities, such as in
health care.

The CARES Act and other COVID-19 response efforts aim to help all, but
especially minority populations that have been hit hardest by the virus.

We’ve
knocked down financial barriers to receiving care during the pandemic and
provided support to our frontline providers to ensure access.

We
continue to focus attention on the devastating effect COVID-19 has had on
nursing homes and the need to do better for residents and staff.

The
Trump Administration has also announced a number of efforts to address the
disparate impact of COVID-19 on African Americans and others.

I
ask unanimous consent to insert a document describing those efforts into the
record.

We
are also taking action beyond COVID.

We’re
working on a bipartisan effort to tackle the tragic issue of maternal mortality
and the need to improve outcomes for moms and babies.

All
Americans want lower prescription drug costs, but our efforts are especially
important as minorities suffer from high rates of common diseases such as
diabetes and hypertension.

We’re
exploring improvements for those with kidney disease, patients in need of organ
transplants and more.

We’re
also in the middle of a transformation of our child welfare system.

We
know that too many children end up in foster care, and that black children are
overrepresented in this system.

Thanks
to our bipartisan efforts, states are now transforming the way they operate to
keep more kids safely at home instead of placing them in foster care.

There
is obviously much more to be done, and I look forward to working with my
colleagues on both sides of the isle to continue these efforts.

Now
I’d like to shift my remarks to focus on the topic of our hearing today.

As
a result of COVID-19 and related stay-at-home orders, millions of Americans
across the country have lost work.

Congress
passed the CARES Act to provide help to those affected in many different
ways, including by temporarily expanding unemployment insurance, or UI.

These
increased UI benefits have played an important role in helping those who lost a
job or who couldn’t work as a result of the pandemic.

Given
the need to act quickly to reduce the spread of COVID-19, providing extra help
through the unemployment system made sense as a way to reduce the economic
impact of stay-at-home orders.

But
now we’re facing a much different situation than we were in mid-March.

States
are reopening, employment recently turned positive, and we need to shift our
focus to helping people safely return to work, making sure businesses are able
to come back quickly and put the country back on a path to economic growth.

We’ve
also learned a few things since the CARES Act became law.

The CARES Act provides an additional $600 per week to those receiving UI –
representing the gap between the U.S. average weekly wage and the average
weekly UI benefit.

One
thing we’ve learned is how poorly targeted the additional $600 per week
payments are, as it appears most recipients are being paid more on UI than they
were when working.

This
discourages people from returning to work or taking a new job, delaying the
recovery.

Recent
research published by the University of Chicago estimates more than two-thirds
of UI recipients may receive benefits that exceed lost earnings, with more than
20 percent potentially getting double what they used to earn – as long as they
don’t work.

Some
will say this is just an academic paper, and that these extra payments aren’t
really an issue today.

Those
folks haven’t been reading the many letters I get from Iowans each day, and I’m
sure every member on this Committee is hearing from businesses having a hard
time bringing people back to work, or from hard-working constituents earning
less than others they know who are getting unemployment.

Let
me share a few stories from the letters I’ve received:

Letter
1: My daughter went back to work voluntarily because she wanted to help ensure
the company would still be around after Covid 19. Many of her co-workers chose
to stay home and, due to the $600 extra per week, are making more than she is.
This isn't right.

Letter
2: Senator Grassley, I am a small business owner who is in desperate need for
additional employees yet I receive very few applications when I post jobs. The
issue is the additional unemployment. With the additional $600 per week my
potential employees make more on unemployment than they would working.

Letter
3: We are trying to hire back laid-off Covid-19 related employees (or anyone
else too) for $15/hr. and we find that they are receiving the equivalent of
$20/hr in unemployment benefits. Suddenly the government became our competitor.
How could that happen?

These
letters represent a small sample of those who write in daily with concerns
about the additional $600 payment.

Based
on these letters and others I’m sure we’ve all received, you’d think everyone
would agree we need to find a better way to help those who have lost income.
But you’d be wrong.

Despite
mounting evidence of the problems these extra payments are causing, the House
passed a bill recently to extend them – not just for a month or two, but for
another six months, through January 2021.

Given
this, I asked the Congressional Budget Office what impact these additional
payments might have if continued. Here’s what they said:

Roughly
five of every six recipients would receive benefits that exceeded the weekly
amounts they could expect to earn from work during those six months.

Employment
would probably be lower in the second half of 2020 than it would be if the
increase was not extended; in calendar year 2021, employment would be lower
than it would be without the extension.

That
doesn’t sound like a recipe for economic growth. Especially given last week’s
jobs report, which shows people are returning to their jobs and that millions
more expect to return soon.

I
know everyone is focused on these extra $600 checks. But let me remind everyone
of the other CARES Act policies that continue past July.

First,
the CARES Act allows those out of work as a direct result of COVID-19 to
get UI benefits through December.

This
includes people who are infected or caring for someone infected, those who can’t
go to work because their workplace is closed due to COVID-19 and those who rely
on day care that’s not available as a result of the pandemic.

Second,
individuals will get an additional 13 weeks of unemployment benefits if they’re
still unemployed after state benefits run out.

And
in states where unemployment rates remain high, further weeks of benefits will
also be available.

And
most importantly, the CARES Act provides funding for what are called
“work sharing” programs.

Under
these programs, instead of laying off employees, businesses with reduced hours
can pay employees a partial UI check to offset lost income. States can also use
it to bring back workers on a part-time basis if they can’t fully reopen yet.

And
don’t forget, UI isn’t the only game in town here.

The CARES Act included many policies to help those affected by the pandemic,
including the employee retention tax credit, the Paycheck Protection Program,
direct payments to individuals and other policies designed to help businesses
reopen and people to return to work.

The
UI system will continue to play an important role in addressing the impacts of
the pandemic.

However,
our efforts must be coordinated to help workers and businesses in a way that is
most productive.

I
look forward to hearing from our witnesses today to learn what’s worked, what
hasn’t and discuss how we can make sure our efforts in Congress can best
support a strong economic recovery.

I
now recognize Ranking Member Wyden for his opening statement.

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