At Hearing, Portman Highlights Need for Return-to-Work Bonus Proposal to Incentivize Folks to Safely Return the Workplace & Bolster Economy
WASHINGTON, DC – Today during a Senate Finance Committee Hearing, U.S. Senator Rob Portman (R-OH) highlighted his proposal to incentivize individuals to return to the workplace, which will be critical to a robust economic recovery as we safely begin to reopen. Portman believes it is critical that we have a workforce that’s ready to step into their old jobs or newly available jobs as the economy reopens and that a return-to-work bonus for individuals reentering the workplace would better help get the American economy running again. He highlighted his proposal of providing $450 a week for individuals returning to work, meaning they’d receive their wages plus this $450 bonus. Portman believes this proposal would ensure that there are as few situations as possible where staying on unemployment is more lucrative than returning to work. He believes this provision should be a part of the next coronavirus response stimulus legislation considered in the Senate.
According to recent research from the American Action Forum and from the University of Chicago, between 60-70 percent of individuals currently on unemployment are making more than they did in their prior job thanks to this federal supplement. Furthermore, the bottom 20 percent of wage earners are making, on average, double what they made in the workforce through this UI program. National Economic Council Director Larry Kudlow praised Senator Portman’s work on this issue and said the White House is considering the proposal as discussions commence about the next COVID-19 legislative package.
A transcript of his remarks can be found below and a video can be found here.
Portman: “Thank you Mr. Chairman, and let me say first of all to my colleague and friend, Senator Carper, I couldn’t agree with you more. We already had a need for worker retraining because we didn't have the kind of skills we needed to fill the jobs in our economy and now we’re going to need even more. So the JOBS Act is a good way to do that. Allow Pell grants to be used for short-term training programs. There are lots of other ways but I think this would be very important and you’re going to play a leading role in that, and I know Secretary Scalia, because I know you have been involved in training. Let me just, if I could, talk for a second about how we got to where we are because it's ten weeks into this insurance program that we started in the CARES Act and were we go from here? We chose $600 for a simple reason and Senator Wyden, I think, said it well when he said it’s rough justice. It was rough justice for trying to make sure that people on average had wage replacement. But I think, speaking I think for everybody, what we all were looking for was wage replacement. And $600 is well above wage replacement for a lot of people.
“And the University of Chicago study that was cited earlier today is that 60-70 percent of the people on unemployment insurance making $600 federal addition to the state benefit, 60 to 70 percent of them are making more on UI than they would make in their previous jobs. So there is this issue and look, the last session I had with anybody in Ohio was on Monday before I flew here, it was a small business and the third thing the guy said to me was what you hear from small businesses when you do your NFIB conference calls - which I do periodically - and so on which is, ‘I now am finally able to reopen and we’re starting to get business back, things are going better, but I can’t find people and people are telling me I'd rather stay on UI because I can make more money there.’ And well you know, with 60-70 percent of people making more money on UI than they make in their jobs, that’s going to happen. I agree people actually want to go back to work. I think it's wrong to say that people want to stay on UI. I think people like being at work. But when they can make a lot more money not being at work, it does create a disincentive.
“I had a town hall recently, a tele town hall, I'm doing these pretty much every week now, and a woman calls in and says, ‘I’ve got two daughters, one of whom is working, one who is on UI, and the one on UI is making more than the one who is working. And the one who is working is upset about that because they had jobs that were comparable prior to this.' So, I mean this is a reality, we have to face it. But it was all good intentions because we were trying to find that average wage – was about $600 per month additional federal benefit to get the average wage so it would be comparable. And so I think it was rough justice but I think now we’re in a different situation. One, we’ve got an economy that is starting to grow, and the numbers for last month were really surprising. We thought we'd lose 7.5 million jobs and we added 2.5 million jobs. I mean no one should say that’s not great news. However, there’s still 21 million people who are on the unemployment rolls. It’s over 13 percent unemployment, for African-Americans even higher, Hispanics even higher, so we do have a huge problem here. The $600 was necessary, in my view, to get us started in this, but now we have a situation where the economy is starting to reopen, people are looking for workers.
“Second, remember back then, we really didn't want people to stay at work because we are encouraging people to just go home. In other words, we were shutting down the economy except for essential businesses. We were actually encouraging people not to be working. Now we want to encourage people to work. So this is why I come to this proposal I’ve been working on for the past couple months with you and other people which is to say for people who are on unemployment making whatever the state benefit is, usually about $360 on average from the state, plus they’re making the $600 federal addition to that. For those people who are on unemployment making more than they could make at work, which is 60-70 percent of those people, why not give them a bonus to go back to work? That bonus could come out of the $600.
“That bonus I've suggested could be for $450. Why? Because that's the amount which would make people even if they were on minimum wage in this country. So, anybody on minimum wage would be able to go back and make just as much if not more in the private sector than they could make on UI if they had this bonus. For us it would be a six-week program so it’s a transition back to work. I really like it because I think it gets people back to work in a time when we need them in the economy but also because it's good for workers. Work is where most people get their health care. Right Mr. Secretary? Most people in America get their health care from work and they lose it when they lose their jobs unless they have a great company that’s furloughing them and keeping paying their health care, but that’s rare. Second, that’s where they get their retirement if they have a retirement account. Typically, it’s a 401(k) at work. But also I think the meaning of work is important to people. I think the self-respect you get from going to work is important to people. So we want to encourage people to go back to work. It’s clearly good for small businesses who are looking hard for workers right now if they starting to re-open. And that's good. And of course it's good for the taxpayer because think about it. If instead of $600, it's $450, the federal government saves money but so does the state government because then people are off unemployment insurance and back on the payrolls and they’re actually paying taxes by the way. So even taking out the fact that they’re not paying taxes and contributing to the economy, that alone, taking them off the federal $600 down to $450, whatever the number is, and Congress may choose another number and not having the $360 on average state benefit, it's tens of billions of dollars in savings to the state governments and the federal government which is savings to the taxpayers. That's a win-win-win, good for workers, good for businesses, good for the taxpayer. Now having said all that what do you think about it Mr. Secretary? Don’t you think that makes sense in order to get people back to work?”
The Honorable Eugene Scalia, Secretary of the Department of Labor: “I do think it makes sense to get people back to work. We’ve got to have an unemployment insurance safety net but for the reasons you gave, work is even better and so I look forward to, Senator Portman, speaking with you and others about what we might do going forward. I'm certainly not here to criticize the CARES Act. I think the CARES Act is a really admirable achievement by the United States government during an extremely difficult time but if it was rough justice, let’s find justice. Let’s use these last few weeks to make things even better.”
Portman: “I would love to find justice, in other words to be able to say, what is wage replacement? But I don't believe that the UI systems around the country, and we will find out from the second panel when they come to talk, are capable of doing that. I think they’re going to want one flat number. They’ve had enough difficulty doing that, unfortunately, I think that’s where we are so let’s do something that makes sense to deal with the immediate problem we have to get people back to work and provide an incentive to do so.”