As of June, a staggering 33 million people have received unemployment benefits in recent weeks. It’s a huge figure — and one that isn’t likely to change as industries continue to navigate business closures and financial losses that have resulted from the coronavirus pandemic.
Earlier this year, lawmakers temporarily provided recipients of unemployment with an additional $600 per week as part of the CARES Act. That expanded unemployment insurance (UI) is set to end after July 31, but it’s become increasingly evident that the need for such support hasn’t gone away.
What’s unclear, though, is whether Congress can agree on a plan to address the program’s fast-approaching expiration.
The $600 boost in UI is in addition to the weekly payment an unemployed individual gets from their state, which averages out to $370 per person (but varies by state). That’s a notable increase and one that’s been vital for those who have been furloughed or laid off during the pandemic. On average, unemployment insurance has historically only been enough to make up 40 percent of a worker’s previous pay.
Due to the timeline set by the original bill, the expansion in unemployment insurance isn’t slated to continue after the end of July — and thus far, lawmakers have yet to take any action to make sure that changes.
This inertia is the result of an ongoing impasse between Democrats and Republicans on the subject. In their $3 trillion Heroes Act, which the House passed more than seven weeks ago, Democrats sought to extend the federal UI until the end of January 2021. Senate Republicans, however, have said repeatedly that they’re averse to supporting such a measure because they fear it could deter people from returning to work.
As economists and recipients of UI have noted, however, the Republican argument misses a key point of the benefit: In part, these funds were intended to help workers stay at home — and not return to work — because staying home is safer and contributes to reducing the spread of the coronavirus.
“I think there is a misplaced worry that unemployment benefits will slow the return of workers to work,” University of Chicago public policy professor Damon Jones told Vox. “In fact, it is much more likely that what will keep people from work is a lack of safety and the risk of infection of Covid-19.”
Relatedly, many unemployed people don’t have jobs to go back to at the moment and need the UI support in order to cover basic living costs like food and rent as the pandemic continues. According to a study by the Economic Policy Institute that was published at the end of June, 11.9 million workers are now unemployed with no likelihood of returning to their previous jobs.
“My industry is just shuttered at this point,” rugby trainer Katherine Henry told Yahoo News. “I’d have no trouble working at our local Starbucks, but they aren’t hiring. Republicans say it’s an excuse not to go back to work, but there isn’t any work.”
For now, the House and Senate have yet to determine whether they’ll do away with the UI expansion altogether or find some compromise that could reduce the amount people receive. Lawmakers will return to work on July 20 and will have a few weeks to hammer out a proposal before they’re expected to leave again for recess on August 10. But this down-to-the-wire timing leaves millions of workers mired in uncertainty about what comes next.
Nick Parisi, 28, an IT worker who is currently relying on UI to cover rent after getting laid off earlier this spring, told Vox, “The idea of having to worry day by day if an extension will be provided to us citizens is the absolute worst feeling that anyone could experience.”
A few potential compromises have been floated, with negotiations to start in earnest next week
As coronavirus cases have surged in several states, forcing them to reverse business reopenings, pressure has increased on lawmakers to figure out an extension for the expanded unemployment insurance. Recently, there have been signs Republicans and Democrats could find a bipartisan solution to the problem.
“We have to find a compromise because we must extend it,” Speaker Nancy Pelosi said during an appearance on CNN’s State of the Union this weekend. In a departure from his past opposition to more UI, Senate Majority Leader Mitch McConnell, too, has acknowledged the need to include unemployment insurance in the next stimulus package. “I think you could anticipate this coming to a head sometime within the next three weeks, beginning next week,” McConnell said at a press appearance in Kentucky on Monday. McConnell, however, has offered few details on what a Republican extension plan would look like.
Publicly, members of the Trump administration have floated a few ideas that indicate how Republicans could lean. Treasury Secretary Steven Mnuchin, who is currently in talks with McConnell, has said he’s interested in a UI expansion that does not surpass what employees would have made at the jobs they had. And White House economic adviser Larry Kudlow has indicated backing for vague “unemployment reforms,” as well as payments for workers who return to their jobs.
As the Washington Post has reported, some congressional aides have also discussed a reduced expansion of UI that would provide between $200 to $400 per week instead of the current $600. That proposal could be coupled with another stimulus check, like the $1,200 one-time payments Congress approved this past spring, the Post adds.
“When my members come back next week, we’ll start socializing it with them,” McConnell said this past Monday of Republican plans on UI.
Congress has a narrow window to get things done when it returns from recess
Much like the way it has handled major legislation in the past, Congress’s efforts on UI are taking place very close to a key deadline. Since the current expansion is poised to expire on July 31, lawmakers have less than two weeks to approve an extension or alternative plan when they return to DC on July 20.
That timing is not stressful only for UI recipients. It also affects states, which will have to recalibrate their UI programs to account for any potential changes. According to one economist, lawmakers’ delay in getting something done could mean that disbursement of new UI benefits could suffer as well.
“[This] will cause administrative chaos if state UI agencies don’t know whether they will or won’t be continuing these payments past the end of the month,” UC Berkeley economics professor Jesse Rothstein told Vox. “If Congress does wind up introducing some new benefit level in late July, many states will not be able to get it [to unemployed people] until September.”
The fallout from reductions in UI support could also be devastating. Experts emphasize that ending the expanded benefit would make more people food insecure and leave many struggling to cover housing costs. They note that consumer spending could well take a hit, too, and further depress the economy.
“Once that $600 a week ends, all of those people have mortgages, all of those people have rent, they are going to have a hard time making ends meet on a regular basis,” University of Kansas economics professor Donna Ginther told Vox.
Weighing the overwhelming need for more UI support will be among the central issues Congress will consider when it returns from recess next week. And until lawmakers reach a resolution, millions of people across the country remain in a holding pattern.
“An extension of benefits will continue to help me pay rent, provide for my family, and put food on the table,” said Parisi. “Most importantly, it will provide assurance that I may continue to survive during these troubling times.”
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