A recent boost to unemployment benefits is shaping up to be a major flashpoint in negotiations over the next coronavirus relief package.
For weeks, out-of-work Americans have been eligible to receive an extra $600 a week on top of regular jobless benefits from their state. The extra amount was part of the $2.2 trillion pandemic response bill signed into law by President Trump in late March.
Now, Democrats are eager to extend that benefits bump beyond the end of July, when the program is slated to expire. And they’re drawing battle lines ahead of talks between the White House and Congress on another rescue package.
“The virus and its impact on the economy will extend beyond July 31,” Sen. Jack Reed (D-R.I.), who has introduced legislation to extend the benefits, told The Hill on Monday. “You’ll still have people that are in a very difficult situation, and their jobs are not available, they really can’t find alternate employment and they have to support their families.”
“In addition, it will provide the kind of support for our economy that is necessary,” he added. “This money typically is going to the family and then being spent on groceries, on essentials immediately, and that’s keeping the economy moving.”
On the other side of the aisle, many Republicans are concerned the enhanced benefits are serving as a disincentive for people to return to work at a time when the economy is struggling to stabilize.
“Calls from Democrats to extend unemployment ‘bonuses’ will kill small businesses and make long-term unemployment much worse,” Sen. Ben Sasse (R-Neb.) said in a statement. “Everyone wants to help workers who lost their jobs, but we shouldn’t make it impossible for small businesses to hire again by pitting them against a crummy government system that makes not working pay more than working.”
Unemployment benefits are administered at the state level, and states vary in both how much money they provide and who is eligible. Regular employment benefits typically are not 100 percent wage replacement.
In 2019, states’ average weekly amounts ranged from $213 in Mississippi to $536 in Hawaii, according to the Labor Department.
The coronavirus pandemic has led to a dramatic increase in joblessness, as many businesses have been forced to close or scale back operations at least temporarily or have laid off workers due to scant revenue.
More than 36 million new unemployment claims have been filed since mid-March. In the week ending May 2, there were 22.8 million continuing claims filed, the Labor Department said.
Lawmakers chose to boost weekly benefits by $600 in the March legislation signed by Trump known as the CARES Act in an effort to replace 100 percent of wages for the average worker when the benefits are added to regular unemployment benefits. They decided to increase benefits by a flat amount across the board in order to minimize the administrative burdens on states, letting states distribute the enhanced benefits as quickly as possible.
As a result, some people are receiving more in unemployment benefits than they were in wages. A paper from researchers at the University of Chicago found that 68 percent of jobless workers eligible for unemployment insurance will get benefits that exceed lost earnings.
Republicans and Democrats differ in how to help unemployed workers weather the coronavirus storm.
Democrats argue that expanded benefits are crucial and should be extended. A $3 trillion coronavirus relief package House Democrats passed on Friday would extend the extra $600 per week through Jan. 31, 2021.
Many Democrats have also expressed interest in linking the expanded benefits to health and economic conditions. For example, a proposal from Reed, Sen. Michael Bennet (D-Colo.) and Rep. Don Beyer (D-Va.) would extend the $600 boost until 30 days after the coronavirus crisis ends; recipients would then receive smaller additional amounts ranging from $200 per week to $450 per week depending on the unemployment rate in their state. Those amounts would continue until the jobless rate comes down to levels that are close to those from before the coronavirus.
“Passing emergency relief legislation that incorporates automatic triggers will strengthen unemployment benefits to sustain people whose lives have been upended through no fault of their own until they can safely go back to work,” Bennet said.
Speaker Nancy Pelosi (D-Calif.) said during a press conference last week that there is broad support in her caucus for automatic extensions of benefits depending on economic conditions, but that the nonpartisan Congressional Budget Office (CBO) uses a methodology that results in these types of proposals being scored as expensive.
“I do think it’s more efficient to have the stabilizers, the CBO notwithstanding,” she said.
Republicans, however, argue that the benefits are too generous and discourage people who were laid off from reentering the workforce.
Before the CARES Act passed, several Republicans unsuccessfully tried to amend the legislation so that benefits would be capped at 100 percent of a worker’s wages before they were laid off. Since implementation, GOP lawmakers have continued to express concerns about the $600 increase to unemployment insurance (UI), and have criticized the extension of the boost in House Democrats’ bill.
“Was it necessary to do something to pump up UI? Absolutely,” Sen. Rob Portman (R-Ohio) said on CNBC last week. “But the level that we took it to makes it very difficult for many small businesses in Ohio and around the country to bring their employees back.”
The White House has also raised concerns.
“The Trump Administration supports policies that get people back to work — our concerns with UI have not changed as it incentivizes people to stay home, raising the unemployment rate,” a senior administration official said. “We’ll continue to work with Congress to sort out details.”
Republicans are floating changes they’d like to see. Some still want to cap payments at 100 percent of a recipient’s pre-unemployment wages, though lawmakers didn’t take that step in the CARES Act because it would be difficult for states to administer.
Portman and Rep. Kevin Brady (Texas), the top Republican on the House Ways and Means Committee, have suggested allowing people to keep getting some amount of benefit for a set amount of time when they return to work, in an effort to encourage reentry into the workforce.
Democratic lawmakers and outside groups backing the boost to unemployment benefits say they are open to allowing people to keep some or all of their extra weekly payment when they go back to work. They also countered GOP concerns about the fact that some people are getting more in unemployment benefits than they were getting in wages, with Beyer arguing it’s likely that millions of people will still be unemployed at the end of the year because their jobs haven’t come back yet, not because they could get more money by collecting unemployment benefits.
“We’ve got to concentrate on all the people who really do need it, who are not going to be hired back,” he said.
Beyer added that those getting more in unemployment payments than they were in wages before they lost their jobs “have not had a lot of advantages in life to begin with.”
How unemployment payments are treated in any subsequent coronavirus relief law remains to be seen. While Democrats have expressed interest in quick action on another package, Republicans have been in less of a rush. White House economic adviser Kevin Hassett said Monday that another package may not be needed.
A spokesman for Senate Finance Committee Chairman Chuck Grassley (R-Iowa) said “the government’s response needs to match conditions on the ground.”
“No one can say with certainty what the economy will look like months from now when funding runs out, especially with 50 different state responses,” the spokesman added.