Talking Points on U.S. Unemployment Insurance

18 Aug 2020

BACKGROUND AND TIMELINE

  • In March, Congress passed the CARES Act, which gave individuals an additional $600 per week on top of what they would receive from state unemployment insurance. This federally funded weekly ‚Äúplus up" expired on July 31.
  • The House Democrats passed a fifth COVID-19 relief bill in May known as the HEROES Act. This bill extends the plus up through January 2021.
  • The Senate Republicans released a draft bill in late July known as the HEALS Act. The bill extends the plus up only through September and reduces it to $200 per week.
  • Using both the HEALS and HEROES Acts, Democrats and Republicans have been in negotiations during the last three weeks to put together a fifth COVID-19 relief bill. The extension of UI has been one of the most contentious issues.
  • Because no deal had been reached by a self-imposed deadline, President Trump acted unilaterally, and likely illegally, on the UI benefits issue.
  • On August 8, President Trump issued an executive order that moves money from FEMA's Disaster Relief Fund to support a $300 per week plus up through the end of 2020. However, states that want this federal money for their citizens would be required to pay an additional $100 per person per week to make it $400 per week for an individual. Many states are concerned they can't afford it. But it is clear that more than a handful of states, both blue and red, are actively taking steps to access the new $300 plus up. It will not be cheap. For example, Virginia estimates that it will cost them $750 million, and their unemployment insurance fund only has $45 million.

WHERE DEMOCRATS AND REPUBLICANS STAND

  • Democrats want to extend the $600 per week federally funded plus up for individuals receiving unemployment insurance. They are proposing that the extension goes through January 2021.
  • Democrats contend this money is absolutely necessary for people to pay their bills and put food on the table as well as to keep the economy as healthy as possible amidst record level unemployment due to the pandemic.
  • Republicans want to reduce the plus up to $400 or less and only extend it between three months or the end of 2020. They contend that the $600 plus up is too much because some individuals are making more than they were prior to being unemployed. They say it is a disincentive to return to work.

THE FACTS

  • Since unemployment insurance does not fully replace an individual's lost wages when they are out of work, Democrats fought for inclusion of the $600 plus up in the CARES Act, and are continuing to fight for an extension.
  • Before the $600 plus up, the average American was making $370 per week on unemployment insurance.
  • After the plus up, the average American was receiving approximately $930 per week from late March through the end of July. More than 31 million Americans received unemployment insurance in July alone.
  • Reducing the plus up would likely have drastic impacts on the broader economy.
    • Moody's Analytics estimated that nearly 1 million more jobs would be lost by the end of 2020 due to a drop in consumer spending.
    • In addition, it would likely exacerbate an already looming crisis in which individuals can't pay their bills, mortgages, rents or adequately feed themselves or their families. This would have severe impacts on the construction industry in the near and long term.
  • Republicans are correct that some individuals are making more than they did before receiving the plus up. However, no study has found this to be a disincentive to return to work.
  • Republicans are ignoring the fact that the federal government and many state governments have not adequately controlled the virus's spread. This is resulting in temporary and permanent business closures, and that means millions of lay-offs and furloughs.
  • Therefore, it is best to continue the plus up because it will hold up the economy by replacing lost wages of those that can't work, in many cases because of circumstances beyond their control.

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