One of the most immediate consequences of the laziness of finance and economics reporters is that they’re incapable of exerting themselves to understand any issue that doesn’t affect them personally. Since journalists are also savers and investors, at least through their retirement plans, if a source says something about mutual funds or retirement accounts there’s a chance a business journalist will bother to verify the information. But if a source says something about unemployment benefits, the reporter will simply write it down word-for-word. After all, what do they know about unemployment benefits?
Thus it has been with changes to unemployment insurance eligibility made in both the original CARES Act and the additional relief included in the appropriations bill that became law on Sunday.
One of the most important features of the CARES Act was something called Pandemic Emergency Uninsurance Compensation, or PEUC. This was a totally new program that gave money to states to continue distributing unemployment insurance payments to former workers who had exhausted their 26 weeks of standard unemployment insurance benefits. There were two important limitations on benefits:
- eligible unemployed people could receive a maximum of 13 weeks of PEUC payments;
- and the last week eligible for PEUC payments was the week ending Saturday, December 26, at which point the program would end.
The CARES Act therefore mechanically created three buckets a person unemployed in 2020 could fall into:
- If you became unemployed the week ending March 21 or earlier, you exhausted your 26 weeks of standard benefits by the week ending September 19, and you exhausted your 13 weeks of PEUC by the week ending December 19. In one sense, that’s good: you got the full 39 weeks in benefits. On the other hand, it means your benefits ended a week before Christmas, and either stopped entirely or you had to transition to a third program, known as Extended Benefits.
- If you became unemployed the week ending March 28, then you perfectly maximized the benefits of the CARES Act, matching the expiration of PEUC with the expiration of your 13 weeks of benefits (this is the situation I happen to fall into).
- But if you became unemployed anytime after March 28, then you were “short-changed” by PEUC, since the program expired while you still had weeks of eligibility remaining.
This is, obviously, a bit screwy from an ethical point of view, but it’s how the law was written, and it’s how the law would have been implemented if not for Sunday’s appropriations bill.
What is a PEUC “extension?”
If you followed the progress of the latest relief bill at all closely, you saw journalists repeat over and over again that it would extend PEUC by 11 weeks, or until March 14, 2021.
But now that you know how the program works, you know you should be asking, “extended which part(s) of PEUC?”
You could imagine Congress trying to save money by writing a stingy, narrowly-targeted bill exclusively for the third category of “unfairly-treated” people: PEUC would remain at 13 weeks of benefits but the deadline to receive them would be extended so people who became unemployed in the last 26 weeks of 2020 would have the opportunity to receive their full allotment.
Likewise, you could imagine an expansive, open-handed version that extends PEUC for all unemployment insurance recipients to March 14, regardless of whether or not they had already exhausted their benefits, or even paying them retroactively for weeks since their eligibility lapsed.
The only way to find out is to actually read the bill, which as far as I can tell none of our finest economics reporters have bothered to do.
Congress tilted towards generosity this time, except for the longest-term unemployed
The relevant part of the bill is Section 206, and it contains great news on three fronts and bad news on one. Let’s start with the good news:
- First, it increases the number of weeks of eligibility, so folks in my second and third categories will receive up to 11 additional weeks in benefits on top of the 13 included in CARES.
- Second, it extends new enrollment in the program to March 14.
- Third, and this is another unreported aspect of the extension, it gives those with remaining eligibility after March 14 up to 4 more weeks to collect PEUC benefits.
Let’s focus on that last part. As I explained above, a defect of the original program is that a lot of people were kicked out on December 26 even though they had not exhausted their 13 weeks of eligibility. In this law, Congress has reduced (although not eliminated!) that issue by allowing benefits to continue to be collected after the program stops enrollment:
“In the case of any individual who, as of the date specified in paragraph (1)(B), is receiving Pandemic Emergency Unemployment Compensation but has not yet exhausted all rights to such assistance under this section, Pandemic Emergency Unemployment Compensation shall continue to be payable to such individual for any week beginning on or after such date for which the individual is otherwise eligible for Pandemic Emergency Unemployment Compensation.”
However, this comes with one big caveat: “Notwithstanding any other provision of this subsection, no Pandemic Emergency Unemployment Compensation shall be payable for any week beginning after April 5, 2021.” Pay attention here: the text does not say “on or after April 5,” but only “after April 5,” meaning weeks beginning on or before April 5 are eligible, i.e. the four weeks beginning March 15, 22, 29, and April 5. That means if you have 4 or fewer weeks of eligibility remaining, you’ll be able to exhaust your PEUC benefits. Any additional weeks of eligibility will vanish, unless the law is updated again.
Now the bad news: I mentioned in passing above that after exhausting PEUC benefits, unemployment insurance recipients had the ability to switch to Extended Benefits, which offers another 13 weeks or more in benefits in states with elevated unemployment rates. That’s an essential lifeline, and it’s good that it was there for workers who exhausted PEUC earlier in 2020. But with the extension of PEUC, a lot of people would benefit from switching back to PEUC from EB in order to preserve their Extended Benefits eligibility.
Unfortunately, Congress did not give people that option. Instead, they’ll be forced to exhaust their EB and only then be able to receive PEUC benefits, if the program has not expired by then. This will provide at most a few weeks of additional benefits, to those who became unemployed at the very beginning of 2020, who will exhaust their Extended Benefits early in 2020 (after already exhausting their 26 weeks of base benefits and 13 weeks of PEUC), while folks who had the good fortune to be fired after the end of March will be able to tack their Extended Benefits onto the end of their extended PEUC benefits. I understand state unemployment systems are unwieldy dinosaurs, both for administrators and beneficiaries, but there’s no possible rationale for giving people who kept their jobs deeper into the pandemic a longer total period of support than those who were fired earlier in the crisis.
Congress had a lot of opportunities to screw up this aspect of the relief bill, and fortunately they mostly avoided them. The shabby treatment of the longest-term unemployed does not cover America’s institutions with glory, but for folks who would otherwise have exhausted PEUC on or after December 26, the bill contains almost undiluted good news.
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