3 reasons Americans need more federal help

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On Friday, he is preparing to sign additional decrees to further help working families.

Democrats have made it clear that another large-scale economic relief bill, including stimulus payments of $ 1,400, will be their top legislative priority.
Economists, including Janet Yellen, Biden’s choice for Treasury secretary, say more help is needed to stop the bleeding before the federal government can try to rebuild the economy. Here are three reasons why:

1. The economy continues to deteriorate

In the first week of the year, the number of new people claiming unemployment benefits exceeded 900,000 for the first time since August. Compensation claims declined only slightly last week and remain at the highest level in months.
The US economy is down 9.8 million jobs from its pre-pandemic level. This is more jobs than what was lost in 2008, after the financial crisis.

Even though a majority of higher-paying workers saw their jobs pick up in the summer, the unemployment rate for low-wage workers remains stubbornly high.

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

2. Things could get worse before they get better

The growing number of Covid cases and deaths, as well as the renewal of local lockdown measures, make it harder for businesses to stay afloat.

The number of small businesses open and in operation is down nearly 30% from pre-pandemic levels, continuing to decline throughout the fall.

Winter weather prevents businesses like restaurants from attracting customers to outdoor patios.

And economists warn more jobs could be lost in the coming months, despite the start of the vaccine rollout.

3. Traditional stimulus will not work during a pandemic

Traditional stimulus packages like one-time direct payments or tax credits aren’t as effective when the recession is caused by a public health crisis, said John Friedman, professor of economics at Brown University and co-director from 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 that ‘they don’t buy as many new ones. clothing or other items as they might otherwise.

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

He pointed out that improving unemployment assistance, food stamp benefits and rent assistance were programs that can provide a stopgap for people now.

While Biden has already renewed eviction protections, he will need Congress to expand federal unemployment benefits and increase food stamps. He also called on lawmakers to provide money for child care, restore emergency paid leave pay, create new subsidies for struggling small businesses and subsidize health insurance premiums. for those who have lost their jobs.

CNN’s Anneken Tappe contributed to this report.

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