This morning the US House of Representatives is planning to pass the $2 trillion dollar economic stimulus package voted out of the Senate 96-0 earlier this week after intensive negotiations between the White House, Senate (including both Majority Leader McConnell and Minority Leader Schumer), and the House (Speaker Pelosi). The bill is enormous, with dozens of provisions ranging from modest grants to specific hospitals or other institutions to huge sweeping programs like cash rebates or corporate lending. We wanted to focus on two key aspects and see how much cash households can expect from the bill. To make things easier, we’re using New York State unemployment benefit amounts, assuming joint filers both work and earn the same amount of income, and ignoring head-of-household filers. We also use big, round numbers, so it’s important to stress this is an illustrative example. Actual benefits may vary substantially, but this is a rough set of guideposts.
The first key benefit is a cash rebate of $1200 per adult (plus $500 per child). This amount is phased out above an annual income of $75,000 per person ($75,000 per single filer, or $150,000 for joint-filers). The second benefit adds $600 to state unemployment payouts per beneficiary per week and extends those benefits for four months. We should also note that in addition to the $600, the new bill expands the scope of who can apply for unemployment insurance, though that fact is not relevant to our calculations. In the table below, we show the dollar amount of payments in unemployment insurance as would typically be the case plus the cash payment and expanded unemployment benefits passed by the Senate bill, varying by household circumstance. As shown, while workers who do not end up on unemployment insurance roles don’t get a huge cash payout, amounts can still be large. Phase-outs over $75,000 in annual earnings mean childless filers making six figures get nothing, and having children makes a big impact for the total cash taken home by households who get these checks. For workers who receive unemployment benefits, the amount of cash put up by the government to keep people afloat is genuinely impressive: for a single filer that was earning minimum wage and working 40 hours per week (~$15,000 per year), the next four months offer about $13,000 in cash payments. There are similar amounts of cash handed out to anybody that loses their job, although number of children and size of income varies substantially.
With similar cash support for fired workers by income, on a relative basis this bill is extremely progressive. For adults earning roughly $20,000 per year or less, the bill more than replaces income lost from the pandemic. For example: adults making $15,000 will have income 162% higher than they otherwise would if they file for unemployment inusrance. Any household with average adult income below $55,000 will receive higher income than they otherwise would. Of course, that’s why this bill is “stimulus”; it’s trying to encourage consumer spending. It’s also notable that those who don’t file for unemployment insurance universally come away better off because our analysis assumes they do not lose income.