Republican states move to end Covid unemployment benefits – leading macroeconomic influencers
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Republican states move to end Covid unemployment benefits – leading macroeconomic influencers

12 May 2021 (Last Updated May 12th, 2021 08:22)

Republican states to turn down Covid-19 pandemic-related unemployment benefits.

Republican states move to end Covid unemployment benefits – leading macroeconomic influencers
Credit: Andrey_Popov, Shutterstock.com.

Some economists believe that it is imprudent of Republican states to end the Covid-19 pandemic-related unemployment benefits. However, grand old party (GOP)-led states now believe that there are more vaccines and jobs in the market than unemployed people.

David Rothschild

David Rothschild, an economist at Microsoft Research and a Ph.D. in applied economics from the Wharton School of Business at the University of Pennsylvania, shared an article on Republican states turning down federally funded elements, right from Medicaid expansion to unemployment benefits.

Although President Biden urged businesses and employers to increase pay for workers citing that Americans wanted to work, Republican-led states are now arguing that the extra $300 a week pandemic unemployment relief is discouraging workers from re-joining the labour force. Tate Reeves, the Mississippi governor, believes that a full economic recovery is possible only when the thousands of available jobs in the state are filled up, adding that the unemployment benefits will end next month.

Other states that have joined the move include Arkansas, Montana, and South Carolina, which are also expected to end the programme within the next month.

An April employment report revealed that the economy gained only 266,000 jobs as against the one million forecast and strong payroll growth after extensive vaccinations urged Americans to return to normal activities. Contrary to expectations, the unemployment rate rose from 6% to 6.1%, but was still lower than the peak of 14.8% in April 2020. According to the US Chamber of Commerce, the $300-a-week federal benefit was responsible for the disappointing report.

Joel Wood

Joel Wood, an environmental economist and associate professor at the Thompson Rivers University, shared an article on a good explanation of government debt sustainability. The commentary highlights the scale and speed of Covid-19 recession and the fiscal policy responses in Canada, right from the start of the pandemic to future fiscal policy choices.

The article highlights the massive economic experiment undertaken by Prime Minister Justin Trudeau to boost recovery, right from Ottawa spending and borrowing for the first time ever to assist people, businesses, and the economy during the Covid-19 recession.

Economists believe that it is likely that the gross domestic product (GDP), which fell dramatically in spring 2020, has already recovered to pre-Covid levels. As a result, it has been a V-shaped recession overall for Canada, with the economic recovery taking place quicker than the past major recessions of 2008 and 1982.

Data further revealed that federal government support doubled in the second quarter of 2020 and remained high throughout the year. At the same time, federal debt rose sharply during the pandemic, to approximately 51% of Canada’s GDP compared to 31% last year, a level unheard of since the 1990s’ fiscal crisis. Experts believe that while the pressures on the medicare system will weigh more heavily by an ageing population, the new larger federal debt could make it far more difficult to deal with.

Nuno Palma

Nuno Palma, a senior lecturer (associate professor) in economics at the University of Manchester, retweeted a survey of economists that concluded that the benefits to richer nations such as Canada, Europe, Japan, US, and others paying for the 12 billion doses of Covid-19 vaccines at the existing prices while providing them for free to the rest of the world exceeded costs incurred.

A majority 53% of the experts in the poll agreed that reliable Covid-19 vaccines would reach developing countries faster if the rich countries paid the pharmaceutical companies at prevailing prices to manufacture and distribute the vaccines, rather than waiving patent protection.

Another 37% of the experts strongly agreed that the benefits to richer countries who paid for the Covid-19 vaccines at the prevailing prices and offered them for free to the rest of the world would exceed the costs incurred by them.