The expansive pandemic unemployment provisions passed under the CARES act stimulus package have been widely acknowledged as the largest boost to individuals who lost their jobs as a result of the Coronavirus induced slowdown. In particular the extra $600 (FPUC) weekly payment on top of the regular state unemployment compensation has been by far the most effective part of the government’s economic policy response to the fallout from the Coronavirus induced recession and unemployment spike.
While the debate rages along party lines on extending benefits, Trump administration officials and Congressional Republicans have strongly indicated they don’t want to extend the $600-a-week FPUC supplementary UI benefit past its current expiry at the end of July 2020. They feel the economy is improving and want to encourage workers to go back to work versus relying on the generous enhanced unemployment benefits. This is why they are pushing back-to-work bonus payments.
House Democrats, led by Speaker Nancy Pelosi, on the other hand have reiterated the importance of the $600 weekly payment for the millions of unemployed by passing putting a new Stimulus bill in the House, called the HEROES act, which includes an extension of the $600 per week extra unemployment payment (FPUC) through to January 2021 as the current FPUC provisions approved in March are set to expire at the end of July.
There is little doubt that the $600 payment and other enhanced unemployment benefits – in addition the PUA covering those workers not normally eligible for state unemployment benefits or extending existing benefit coverage periods by 13 weeks (under PEUC) for those whose jobs or livelihood were impacted by COVID – will be a big boost to many households. However the roll-out of these new provisions and payment to recipients has been less than stellar to say the least, mainly because of decades of under-investment in the administrative capacity of state UI agencies and systems (many still using mainframes or home grown software) has left them incapable of flexibly in adjusting to the new provisions and determining the eligibility of newly covered worker groups. Even back pay for retroactive payments is taking far longer than planned.
A Compromise on Extending Unemployment Benefits?
It appears highly likely that the President and his administration will have to provide some level of support to the millions of unemployed workers given the resurgence of the Coronavirus in several states that has forced extended business closures. As such a Senate proposal by the Democrats called The American Workforce Rescue Act (AWRA), may provide a party line compromise that the president could get behind, particularly as the presidential election is only a few months away. The AWRA proposal would continue to provide the full $600 extra weekly unemployment payment as long as the states unemployment rate is above 11%. When it drops below 11% (based on a three-month average), it will start to phase out to $0 until the state’s unemployment rate drops below 6%. So essentially $100 less for every percentage drop between 11% and 6% of a state’s unemployment rate.
With the current provisions expiring in a few weeks, I expect that that Congress will eventually craft a bill to extend these UI benefits to the end of 2020 using a hybrid of one of the above proposals – which may well also include another 2020 stimulus check to cover those not eligible for unemployment benefits.
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