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Actual Unemployment Benefits may be Less than Initial Amount

By: Leyuan Zhou


As the American economy struggles to stay afloat amid the economic crisis caused by Covid-19, a new wave of uncertainty - this time in the form of federal aid - will deal another blow at the fragile country.

On Saturday, after a series of unproductive discussions between the Democratic and Republican parties about a potential relief package resulted in a stalemate, President Trump sidestepped Congress to sign a stimulus bill for unemployment benefits.

Although the Labor Department reported that on Thursday, new applications for state unemployment aid fell under one million for the first time since March, the amount of the new federal stimulus is still likely to be smaller per person than initially suggested. It also remains unclear when the money will actually be disseminated among the jobless, how long it will last, or how many workers will benefit.

As the $600-a-week federal supplement to unemployment benefits meant to address the pandemic stopped at the end of July, Senate and House members participated in intense conversations on sending other stimulus checks to American taxpayers. However, discussions stalled and the two parties were finally unable to reach a compromise that would provide unemployment benefits that would also fund schools, testing, child care, small business, and local governments.

Last week, Mr. Trump said that he was taking executive action to provide unemployed workers with $400 a week in extra payments, supplementing their regular jobless benefits controlled by states. His program, known as Lost Wages Assistance, called for states to contribute to a quarter of the total cost. For governors, it was a shock - they would have to send in billions of dollars despite their plunging tax revenues caused by the economic collapse.

Following the reactions from the states, the Trump administration offered a new suggestion: instead of adding $100 per week in addition to existing benefits, states could count existing benefits toward their contribution. This would mean that most unemployed workers would be receiving $300, not the initial $400.

Even with the overall cut in benefits, a large population of the unemployed still won’t receive any aid. The Labor Department’s new provision, which states that the new program will only be available to the “unemployed or partially unemployed due to disruptions caused by Covid-19”, only qualifies the people who are already receiving at least $100 a week in benefits. This would mean that roughly one million people would be unable to receive unemployment benefits, according to Elize Forsythe, an economist at the University of Illinois.

“They’re the people who need it the most,” said Ms. Forsythe. “They were low paid to begin with, and then being singled out for not getting this benefit I think is really cruel.”

With the states needing to adjust to the new provisions when they are already inundated by unemployment applications, the benefits could take weeks or even months to reach those who need the money. For example, some states took months to pay benefits in the Pandemic Unemployment Assistance program, which covered independent contractors, self-employed workers and others excluded from the normal unemployment insurance system.

For many unemployed workers around the country, the uncertainty around the benefits will further add tension to their credit card debts and rent bills, something already exacerbated by the pandemic. For those struggling to be noticed by state unemployment offices, these delays will prove to be even more frustrating.

ArticleSource: https://www.nytimes.com/2020/08/13/business/economy/unemployment-benefits-coronavirus.html


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