Millions of unemployed Americans received their final $600 unemployment payment from the federal government last weekend and things are not looking good for a continuation of the extra benefit past July.
Senate Majority Leader Mitch McConnell (R-Ky.) and House Speaker Nancy Pelosi (D-Calif.) are nowhere near a deal on the next bill to help the country stumble through the coronavirus pandemic.
The House passed a bill preserving the expanded benefits two months ago, but McConnell waited until Monday to unveil a complicated proposal that would take months for some states to implement. Both unemployment proposals are small parts of legislative packages with many other areas of disagreement.
Even if Congress somehow passes a bill reauthorizing the $600 payments for a short period to allow time for lawmakers to reach a broader deal, it still could take weeks for the benefits to actually resume ― and such an interruption could have dire consequences.
More than 25 million Americans have been receiving the extra $600 a week on top of their state benefits. Without the federal supplement, the average benefit will shrink by 55%, according to the Century Foundation, resulting in such a steep collective income loss that economists worry it could rattle the entire economy.
To make matters worse, the benefit lapse is happening just after the expiration of a moratorium on evictions from federally subsidized properties, and right before the rent is due.
A big part of the problem is that no matter how fast Congress makes up its mind now, state workforce agencies will be slow.
It took the Tennessee Department of Labor and Workforce Development two months to approve Brenda Waybrant’s unemployment claim after she filed for benefits in March. She said she missed just one car payment while she waited and still received a repossession notice.
With the $600 added to her state benefit, Waybrant, 35, said she has been able to pay all her bills. Without the extra $600, she won’t. Tennessee’s maximum state benefit of $275 is one of the lowest in the country.
“That covers my rent and groceries and that’s about it,” she said. “It doesn’t cover my car payment, it doesn’t cover my credit cards, it doesn’t cover my phone and my internet.”
Republicans have argued that the extra $600 discourages people from returning to work, thereby hampering the economy. They have cited anecdotal reports from employers complaining that their laid-off workers are receiving more in unemployment benefits than they would in wages.
But Yale University economists looked at whether people who received more in benefits than they previously earned were less likely to return to work, and it turned out they weren’t, at least not on a large scale. The researchers said this week they found “no evidence to support concerns about adverse aggregate labor supply effects of expanded UI generosity in the context of the current pandemic.”
In Waybrant’s case, she doesn’t want to find another job. She works as a restaurant server and said her employer is set to reopen in October. She is paying to maintain her health insurance while on furlough. Next week she’s having surgery to remove a fibroid and will need four weeks of bed rest, meaning she couldn’t chase down a new job even if she wanted.
She thinks Republican politicians are oblivious.
“They’re living on thousands and thousands of dollars a month that regular people just don’t have,” she said. “We know that our wages have been so low for so long that most people don’t have any money saved up.”
Senate Republicans are starkly divided over what to do about the expanded unemployment benefits. It’s one of the biggest reasons why Congress hasn’t acted yet. Some don’t think they should pass any additional relief, including an extension of the federal unemployment benefits, because it would add too much to the budget deficit.
The proposal unveiled by McConnell earlier this week would reduce the extra benefits from $600 per week to $200 per week until October, and then switch to a new formula so that total benefits don’t exceed 70% of what unemployed workers earned from their prior jobs. But even some Republicans have little confidence in that plan given the antiquated technology that states rely on to dispense unemployment benefits.
“Many of our state departments of labor ― they just got microwaves last week,” Sen. John Kennedy (R-La.) quipped on Tuesday.
The National Association of State Workforce Agencies has practically begged Congress not to pass something complicated. Georgia’s Republican labor commissioner told Bloomberg Law this week that reducing the $600 payment for several weeks and then switching to a targeted wage replacement level is “the dumbest idea ever.”
The White House, meanwhile, has continued to talk up just passing a short-term fix on unemployment insurance and a moratorium on evictions ahead of Friday’s deadline ― even though Democrats have repeatedly rejected the idea of a bill that doesn’t deal with other issues, such as aid to states and extra food assistance. But the idea also appears to be gaining steam among Senate Republicans given that negotiations between administration officials and top congressional Democrats don’t seem to be going anywhere.
“The rest of it, we’re so far apart, we don’t care, we really don’t care,” Trump told reporters on Wednesday, referring to the congressional talks.
Whatever happens, state workforce agencies can’t move fast on federal changes. The extra $600, formally known as federal pandemic unemployment compensation, has already been switched off, as most states made their final payments over the weekend.
“At this point it would take them 2-4 weeks to switch it back on,” Michele Evermore of the National Employment Law Project said in an email.
If congressional negotiations over the next coronavirus bill collapse this week, Republicans could ultimately decide to move forward with a narrower package, whether the White House proposal or something a bit broader, that includes some kind of extension of unemployment benefits.
“The [Republican proposal] is full of provisions that I would frankly dare my Democratic colleagues to actually say they oppose,” McConnell said on Tuesday.
But not even the most vulnerable Senate Democrat is sweating voter fallout from that scenario.
“It’s a little late to start looking at that now,” Sen. Doug Jones (D-Ala.), who faces a tough reelection fight in a red state, said Wednesday when asked if he supported a short-term fix. “They should have started looking at that two months ago when we were asking them to.”