A Shaky Bridge: Congress Averts Unemployment Cliff, but Fails to Secure Enough Jobless Aid

Until last night, Congress appeared ready to let more than 12 million jobless workers exhaust their last drops of unemployment pay the day after Christmas, as the pandemic continues to rage exponentially across the country. Thankfully, the deal clinched Sunday averts this steep cliff—yet it fails to provide a true bridge to better times for the millions of workers currently out of a job.

The impact of this bipartisan agreement could easily be overlooked and understated, as attention has centered on the relatively small size of stimulus payments ($600 as compared to $1,200 in April) and the lack of state and local aid, among other omissions. Just last week, Columbia University researchers predicted that such unemployment provisions alone could keep some 7.6 million Americans out of poverty in January 2021.

That’s largely because the stimulus package preserved and extended historic elements of the CARES Act into the new year. This includes benefits for gig workers, low-wage workers, and part-time workers typically excluded from unemployment aid through an extension of the Pandemic Unemployment Assistance (PUA) program, which is currently registering 9.2 million weekly claims. Moreover, the deal reactivates Pandemic Unemployment Compensation (PUC), providing an additional $300 per week supplement on top of both PUA (which average $240 per week) and regular unemployment benefits (which average $317 per week), both of which cover less than half of laid-off workers’ prior pay.

As described in Table 1 below, this means that the average worker on Pandemic Emergency Unemployment Compensation (PEUC) will receive $7,400 from the bill over the term of the benefits, and the average worker on PUA will receive $6,230 (totals include both the impacts of the UI provisions and the $600 stimulus check to individuals). The aid is a powerful—yet temporary—tool to fight racial inequality, as Black workers are 50 percent more likely to be hurt by the cutoff in benefits. While unemployment was hitting Americans equally earlier in the pandemic, its effects are now falling the hardest on workers of color.

TABLE 1

Unfortunately, when it comes to jobless aid, Congress forgot the basics and failed to seal the deal. Every unemployment extension passed since President George H. W. Bush in 1991 added at least thirteen weeks of unemployment benefits; during the Great Recession, a maximum of seventy-three weeks of additional benefits were added, for a total package of ninety-nine weeks. This stimulus deal, however, falls well short of these precedents, as the bipartisan framework released last week was slashed from sixteen weeks of benefits to just eleven weeks in the final agreement.

States will be asked to implement a significant number of new rules for these programs for a law that will only last eleven weeks. In reality, many workers won’t receive the benefits until well into this short period—and at that point, the states will be forced to cut it off once again. Worst of all, Congress will be setting itself up for another 10 million-plus worker benefit cut off that will start in mid-March, before the new administration and Congress can be reasonably expected to pass another round of relief.

This short duration of limited aid means that the stimulus bill won’t give jobless workers enough support to last until the vaccine is more widely rolled out. The families of workers in occupations beset by closures, such as live entertainment, hospitality, restaurants, and other personal services, will once again be facing the disappearance of what could be their only source of income. And it should not be lost that the package cuts back PUC from $600 to $300, and does not provide any retroactive pay since the benefit was cut off in September. The savings of jobless workers have been largely or completely depleted since then, and the limited aid in this package is unlikely to be enough for them to rebuild or even pay their accrued debt from that time.

Congress has given itself little choice but to immediately get to work on the next economic stimulus package as soon as President Biden and the 117th Congress take office. That package must build on the CARES Act and include key reforms to make sure benefits are available as long as the economy remains constrained by this disasterous pandemic.

Tags: unem, unemployment benefits, unemployment insurance, pua, peuc