Enhanced unemployment insurance likely to expire during COVID-19 aid talks

The $600 weekly boost in unemployment insurance payments is likely to expire before lawmakers reach a deal on the next coronavirus relief package, raising the stakes for negotiations and creating more uncertainty for people relying on the government aid.

Because most states process payments on a weekly cycle ending on Saturdays or Sundays, states will stop paying out the extra $600 on July 25 or 26 unless Congress acts quickly. But negotiations between the House and Senate aren’t expected to begin in earnest until early next week — and the two parties remain far apart on the contours of an agreement.

That risks leaving unemployment insurance recipients in limbo while the negotiations play out. Even if Congress acts to renew the weekly assistance in late July or early August, the gap could lead to a weeks-long delay in delivering additional payments.

“We may already be out of time to avoid the iceberg,” said Rep. Don Beyer (D-Va.), vice chairman of the Joint Economic Committee.

Adding further uncertainty, Republicans are now suggesting lowering the weekly boost to $400 or less, out of concerns that some recipients are taking in more money than they made before losing their jobs during the coronavirus lockdowns.

Speaker Nancy Pelosi (D-Calif.) signaled openness to compromising with Republicans on the size of the weekly payments, depending on whether there’s another round of stimulus checks to individuals included in the package.

“I’m all for the $600,” Pelosi said during a press conference in the Capitol on Thursday, while adding that “the whole package will depend on what we do also for direct payments, which are so essential.”

“So when they’re giving away all this big money and they worry about $600 for families who need it so desperately, it just makes you wonder, who are they here for?” Pelosi said of Republicans.

The Labor Department reported Thursday that about 1.3 million Americans filed new claims for unemployment benefits during the second week of July. A total of about 32 million people were estimated to be claiming unemployment insurance or Pandemic Unemployment Assistance for gig workers.

While the U.S. has recovered about 8 million of the more than 20 million jobs lost since the coronavirus pandemic forced business closures, weekly jobless claims have exceeded 1 million since late March.

The $2.2 trillion coronavirus relief law enacted on March 27 provides an additional $600 per week in unemployment insurance payments through July 31. Since the end of the month falls on a Friday, states would need an extension before July 25 to fully cover the last week of July, which spills into August. Otherwise, recipients’ unemployment insurance payments will be reduced to the level set by individual states.

Even if Congress extends the enhanced unemployment insurance in some form and makes any missed payments retroactive, the delays would come at a time when most recipients face an Aug. 1 deadline for rent or mortgage payments, in addition to other monthly bills.

“You have people who get thrown into these terrible situations because of the timing, because of the lapse that is absolutely unnecessary,” said Heidi Shierholz, senior economist and director of policy at the left-leaning Economic Policy Institute.

Senate Majority Leader Mitch McConnell (R-Ky.) said this week that the upper chamber won’t start negotiating a coronavirus aid package until next week, when senators return to Washington from a two-week recess.

“I think you could anticipate this coming to a head sometime within the next three weeks, beginning next week,” McConnell said.

House Democrats passed a $3 trillion coronavirus relief bill two months ago that would extend the $600 boost in unemployment insurance through January, in addition to providing a second round of direct payments of up to $1,200 for individuals and $6,000 for families with children.

Senate Republicans have declined to take up that bill. Instead, GOP lawmakers and Trump administration officials have floated renewing the weekly unemployment payment at a lower amount or capping it in a way so that the total doesn’t exceed a recipient’s prior income.

Treasury Secretary Steven Mnuchin told CNBC last week that “you can assume that it will be no more than 100 percent” of a worker’s previous pay.

The Chamber of Commerce on Thursday called for a “middle ground” of 80 to 90 percent of a worker’s prior wages and a maximum of an additional $400 per week or $200 for states that can’t adjust their computer systems to the new amount. The business lobbying group also called for phasing out payments based on the unemployment rate.

Enhanced unemployment insurance is far from the only item that needs to be resolved in talks over the next coronavirus aid package. Direct stimulus payments, aid to help schools reopen safely, funding for state and local governments and liability protections for businesses will all be part of the negotiations.

If Congress doesn’t act to extend the enhanced unemployment insurance until after it expires, payments won’t resume immediately.

Experts estimate it would take at least two weeks for recipients to receive the weekly funding boost. That delay could be even longer if Congress makes significant changes to how the payments are calculated.

Michele Evermore, a senior researcher and policy analyst at the National Employment Law Project, said that if the amount is changed from $600 a week, “it shouldn’t take longer” than a couple of weeks for the aid to reach recipients.

“But if it changes it to a percentage of prior income, it would take months, because they would have to redo everything about how benefits are determined,” she said. “And anything above the state level benefit is federal, so they have to account for that separately. It would be massively complicated.”

Mike Lillis contributed.