Back in April I wrote an overview of the state of the federal pandemic response, and said (optimistically, I thought), of expanded unemployed insurance benefits that,
“What happens next depends on both our progress against the virus and the state of the economy. If we’ve beaten back the virus sufficiently, Republicans may allow the federal top-up to lapse on the theory it will encourage workers to accept lower wages. If deaths are still high or even rising, and the economy is still in government-ordered paralysis, I would hope enough votes could be found for at least another 16 weeks of funding.”
Well, “deaths are still high or even rising,” so as expanded unemployment insurance benefits near their expiration, I want to revisit the question with a narrower focus on what to look for in any eventual unemployment insurance deal.
The size and duration of expanded federal benefits
A somewhat strange decision was made in the March CARES pandemic relief package, which created a $600 federal “top-up” of unemployment insurance benefits: instead of granting each unemployment insurance beneficiary a specified number of weeks of expanded benefits, the federal top-up would be payable to all unemployment insurance beneficiaries (whether or not they began receiving benefits before or after the coronavirus outbreak) through the last full week of July, and then would expire for all unemployment insurance recipients at the end of the July.
On the one hand, the logic was obvious: it was widely anticipated, or at least hoped, that the pandemic would have ebbed by the end of July and the economy would have “snapped back,” allowing unemployed workers to return to their old jobs or at least easily find new jobs in the resurgent post-pandemic economy.
But I call the decision “strange” because it means workers who lost their job at the end of March (as I did) will have received a full 16 weeks of expanded unemployment insurance benefits, while a worker who loses her job today will receive just one or two weeks of expanded federal benefits.
So the first thing to look for in the next round of pandemic relief is how, and for whom, will the federal top-up be expanded? There are a number of possible options:
- all recipients, including previously excluded unemployment insurance beneficiaries (the so-called “PUA beneficiaries”), until a specified date;
- all recipients, up to a specified number of weeks of unemployment insurance benefits (so I might be excluded as having “exhausted” my 16 weeks of expanded benefits, or the cap could be lifted to 24, 32, or 39 weeks);
- the federal top-up could be gradually reduced as (or if) the unemployment rate falls from a specified level, either at the national or state level;
- the federal top-up could be mechanically reduced over time without regard to national or state economic conditions, for example falling by $100 per month over the next 6 months until it reaches $0.
Each of these options comes with different costs and benefits so which, if any, of them Congress ultimately enacts will have a dramatically different impact on our eventual economic recovery.
The length of extended benefits
I try to be careful to distinguish between two elements of the CARES Act changes to unemployment insurance: the expanded federal benefits (the “top-up” discussed above) and the extended state benefits. Whether or not the federal expansion is renewed, your state unemployment insurance benefit has already been extended from the typical maximum of 26 weeks to a new maximum of 39 weeks. In my case, since I happened to become eligible the last week of March, my extended benefits will expire the last full week of December (quite a Christmas present, I know).
Unfortunately, this means that the economic pressure to lengthen extended benefits will not align with the pressure to extend expanded benefits past July. By early November the Republican-controlled Senate will already know whether it has lost power. If Trump has been re-elected and the economic crisis continues, benefits may receive another extension. If Trump loses, there’s no reason to believe the Senate won’t pursue the same scorched-earth strategy it used to hobble Obama in the aftermath of the Great Recession.
That means the decision whether or not to include extended benefits in the current negotiations is one of the most important decisions Congress will make in the next two weeks. Extending benefits now, while the results of the November election are still uncertain, means their expiration in January won’t be the first crisis a potential President Biden has to face.
The reimposition of work search paperwork requirements
Longtime readers already know there are no work requirements, only paperwork requirements. One of the most onerous such requirements is the so-called “work search requirement” to receive continuing unemployment insurance benefits. In the logic of the program, unemployment insurance recipients shouldn’t be doing housework, shouldn’t be caring for children or relatives, and shouldn’t be enjoying their time out of the workforce. Their new full-time job should be submitting job applications.
This requirement, for obvious reasons, was suspended nationwide during the initial stages of the pandemic, but some states have tentatively moved towards reinstating it (Texas, Maine). However you feel about the ease or difficulty of meeting work search paperwork requirements, the requirements exist for the sole purpose of preventing people from receiving their unemployment insurance benefits. Many people will be able to meet the work search paperwork requirements — many, but not all. And those who fail to meet those paperwork requirements will lose their benefits, go hungry, miss rent payments, face eviction, and serve as another drag on a devastated economy.
How and whether Congress addresses work search paperwork requirements is an essential, but widely-ignored, question about the speed at which we eventually recover from the present crisis.