After months of declining numbers and some experts believing that COVID-19 cases may be in permanent decline, they’re back on the rise – and it’s all thanks to the more contagious Delta variant. Believed to be some 40 to 60 percent more contagious than other strains of COVID-19, cases are rapidly increasing in areas with low vaccination rates, prompting fears that the nation’s economic growth could be stunted and more localized restrictions could be put in place.
We’ve already seen Wall Street’s reaction to the rising case numbers, as the stock market had its worst day in months on Monday, July 19.
If economic activity declines and hiring slows in the near-term, there’s one big question to ask: What should be done about the enhanced federal unemployment benefits that are set to expire on September 6? Some economists are calling for them to be extended. We’ll dig into why that could be both good and bad.
Making the Case For it
As we noted above, the more contagious Delta variant is driving more COVID-19 infections, largely in the unvaccinated. However, an increase in cases is likely to prevent even those who are vaccinated to take part in some of the activities that they have perhaps begun doing again. This could have dire effects for the travel, hospitality and restaurant industries, just as these sectors appear ready to rebound in a big way.
If layoffs increase and hiring slows, extended unemployment benefits could represent a nice safety net for out-of-work Americans until this latest wave subsides.
Making the Case Against it
There’s plenty of opportunity out there right now that out-of-work Americans are not yet taking advantage of because of the enhanced unemployment benefits. In fact, many states have already ended the extra $300 per week as a means of forcing Americans back into the workforce. But perhaps the biggest argument against extending the unemployment benefits is the fact that there’s a tool out there to prevent – or at worst, significantly reduce the severity of – a COVID-19 infection: the vaccines. It’s more likely that you’ll see a significant uptick in vaccination rates in late August and early September as Americans ready to return to the workforce than you will the unemployment benefits get extended.
The Bottom Line
The Delta variant is a stark reminder that this pandemic is not yet over, but unless things worsen to levels that aren’t anticipated, there’s no reason to extend the unemployment benefits, especially with effective vaccines available to prevent COVID-19 infections. A better strategy is to universally promote getting vaccinated, so Americans have peace of mind that they’ll be protecting themselves from infection – whether it’s in the workplace or elsewhere. Even in the cases of rare breakthrough infections, the vaccines virtually eliminate severe illness and hospitalization.