Research routinely finds that unemployment insurance is one of the most effective parts of the safety net, both in cushioning the effects of job loss on families and in lifting the economy. In economists’ parlance, the program is “well targeted” — it goes to people who need the money and who will spend it. Various studies have found that in the last recession, the system helped prevent 1.4 million foreclosures, saved two million jobs and kept five million people out of poverty.
The impact could be greater in this crisis because the program is reaching more people and giving them more money. The government paid $48 billion in benefits in April and has reached $86 billion in May, according to the Treasury Department.
Ms. Markowska, of Jefferies, expects government data on Friday to show that personal income actually increased in April thanks to the unemployment benefits, stimulus payments and other programs. That money has flowed through the economy in rent payments, grocery store trips and other spending — not only helping the recipients but also preventing a steeper downturn.
“These are paycheck-to-paycheck folks, who are going to spend this money,” said Elizabeth Ananat, a Barnard College economist who has been studying the effects of the pandemic on low-wage workers. “They’re going to spend this money, keeping us from having a rent-payment crisis and from having a malnourished-children crisis. That strikes me as pretty good for the economy over all.”
When Julie Glasser was summoned to an online department meeting in late March, she thought she might learn how her company, a vacation-rental start-up in Portland, Ore., was scaling back acquisitions or adapting to the growing pandemic. It took until the end of the meeting for her boss to deliver the real news: Everyone on the call was laid off, immediately.
A single mother of two, Ms. Glasser applied for unemployment benefits the same day. She enrolled in health insurance through the Affordable Care Act and signed up for food stamps. Still, there was no way she could cover her costs.
Article source: https://www.nytimes.com/2020/05/28/business/economy/coronavirus-stimulus-unemployment.html
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