When Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March, it expanded access to unemployment benefits for a number of workers impacted by COVID-19, and increased the value of those benefits significantly—including for those who typically do not qualify for unemployment insurance (UI). To reach those individuals, Congress created the Pandemic Unemployment Assistance (PUA) program, modeled after the existing Disaster Unemployment Assistance program. PUA will provide workers who lose their jobs or are unable to work due to the pandemic a weekly benefit of $600 on top of a partial wage replacement calculated for their state.
Historically, youth unemployment skyrockets during a recession, but traditional unemployment insurance often leaves these workers out. PUA, however, offers an opportunity to extend help to this population during the pandemic. Many high school students work, although standards for who qualifies for help will hinge on state interpretations of existing regulations that restrict the benefit for certain minors. Fortunately, the CARES Act provisions should provide significantly more relief for college students working their way through college. In total, 11 million college students work; over 8 million of those students, or 75 percent, work twenty hours or more. Of those, over 4.4 million students work thirty-five hours or more.
States and the U.S. Department of Labor should appropriately implement PUA to ensure young workers receive the benefits owed to them, and Congress should build on these initial steps and expand the options available for students and young people leaving school and entering a recession economy. Specifically, policymakers should:
- clarify existing regulatory questions related to benefit eligibility calculations for students with only recent work history and those forced to leave their campus residence;
- ensure that state agencies implementing these regulations do not inappropriately exclude students or delay access to benefits;
- clarify recent modifications to initially narrow Department of Labor guidance that puts up barriers for gig workers, many of whom are young, trying to access PUA; and
- pass new legislation providing benefits for new job entrants graduating into a declining economy.
Recession-Era Youth Unemployment
Students and young people are often left out of unemployment insurance programs, either because they do not have sufficient work history, or because they work part-time and their earnings are too low or do not meet the requirement for part-time benefits under their state’s rules. At the same time, young people often face very high unemployment during economic downturns, and young people of color face the biggest barriers to work. The unemployment for young people during the Great Recession, for example, reached almost 20 percent; for black teens, it was 43 percent. By comparison, the unemployment rate for the general population peaked at 10 percent.
Figure 1
At the apex of the Great Recession, the unemployment rate for 18–24 year olds was 74 percent higher than for the population as a whole. Given current projections that the actual unemployment rate for March 2020 reached 17 percent, a ratio similar to that of the Great Recession would put the unemployment rate for young adults in March at an astounding 30 percent.
Many of the young people who have lost their jobs will be students working their way through school, or supporting their families, and who should be eligible for new benefits.
CARES Act Expansions
The CARES Act provides for both an extension and expansion of benefits for those who typically qualify for UI, as well the PUA program for “covered individuals,” or those not qualified for regular (or extended) unemployment compensation, including those who have exhausted all rights to such benefits, self-employed people, individuals seeking part-time employment, and those with insufficient work history. Those individuals will qualify if they are unemployed, partially unemployed, unable or unavailable to work because the individual:
- has been diagnosed or experiencing symptoms of COVID-19 (or household members are);
- is providing care for a family or household member who has been diagnosed with COVID-19, or for a child whose school or child care center closed due to COVID-19;
- is unable to get to work or commence employment due to COVID-19-related travel restrictions, a business shutdown due to emergency declarations, self-quarantine, or a job offer reversal, or is an independent contractor forced to suspend operations;
- has become the head of household due to a COVID-19 death; or
- is unable to work due to health ramifications of previous COVID-19 experience.
Recipients qualify for benefits of at least $600 per week, plus the greater of (a) their state’s calculation of a weekly benefit based on their wages, or (b) 50 percent of average benefit in the state. If the person works less than full-time, the amount is prorated by the amount worked. On average, nationally, 50 percent of a state’s median benefit is $190 per week.
The design of PUA will reach far more students than would otherwise qualify for existing UI benefits, including current high school students, college students, and both high school and college graduates.
PUA for College Students
According to the National Center for Education Statistics, 81 percent of part-time college students and almost half of full-time students work; in all, about two-thirds of college students work, and about half are financially independent. In total, about 11 million college students work, and 75 percent work twenty hours or more. Many of these students are first-generation college students and are more likely to come from low-income families than ever before.
Thankfully, many working students who lose their job due to COVID-19 should qualify for some help. About half of states will cover student workers who are still available for full-time work with regular UI benefits. In other states, most students are disqualified from state UI because they are not considered available for full-time work due to their student status (especially if they are full-time). However, the CARES Act creates a new mechanism for states to cover these workers through PUA. Section 2012(a)(ii)(2) of the CARES Act specifies that those individuals who are disqualified from UI by such rules are eligible for PUA, since the program covers anyone who “is self-employed, is seeking part-time employment, does not have sufficient work history, or otherwise would not qualify for regular unemployment.”
However, to receive assistance from PUA, individuals must still be considered able and available for work (within the constraints placed on work during the COVID-19 pandemic). In order to appropriately implement the CARES Act, states will need to adjust their legacy systems to ensure that, given the directive by Congress to cover part-time workers, they will consider students who would be partially available to work due to their student status are eligible to collect PUA—and can do so without burdensome wait times or additional processes./
The existing regulations do not account for a student who was forced to move away because their dormitory closed, but whose place of employment stayed open.
Some students may also run into some complicating factors. For example, the existing regulations do not account for a student who was forced to move away because their dormitory closed, but whose place of employment stayed open. (Such workers could be considered to have voluntarily quit and ineligible for UI).
Whether these students qualify for state benefits or the new federal PUA payments, they will receive the $600 boost between now and July 31. PUA sets a flat minimum of one-half the state’s average weekly benefit amount, which is very useful for workers with limited work history who might qualify for less based on the state formula alone. However, if the student earned more than the minimum, based on an assessment of the previous year’s taxes paid, they could receive a benefit based on those earnings. This means that students with uneven work history may revert to the minimum benefit, when their most recent earnings could have triggered a higher benefit amount.
PUA for Current High School Students
About 18 percent of high school students ages 16–17 work, and about 9 percent work more than fifteen hours per week.
It is unlikely that a high school student will have worked enough hours, or long enough, to qualify for their state’s traditional unemployment insurance benefits, and they are subject to the same full-time student disqualifications as college students. The CARES Act directly links PUA to Disaster Unemployment Assistance rules unless otherwise specified, and the DUA Manual (ETA Handbook 356) considers the question of high school students. The handbook states that for students under 18, one should consider whether the loss of employment was the individual’s principle source of income and means of livelihood. More specifically, it acknowledges that students assisting with a family business or farm may be critical, and that if the student already qualified for a state’s unemployment insurance program, they would certainly qualify. But it leaves open questions as to how states will assess part-time work or summer work.
If they did qualify, students would receive $600 per week, plus at least the minimum DUA benefit of 50 percent of the average benefit. If their wages were higher, they would qualify for the benefit a state would provide based on their earnings in the prior tax year.
PUA for High School and College Graduates
Graduation season is rapidly approaching. About 1.2 million high school graduates leave high school each year and do not enroll in college, and about 4 million enrolled in higher education at the undergraduate and graduate level will graduate from their program.
As stated earlier, students who lost a job due to COVID-19 during the academic term and graduate this May or June should qualify based on a job loss, regardless of whether they had a separate offer of employment starting after the academic term.
Students who were not working during the academic term, or who were working but had a separate employment opportunity planned for the summer, may qualify for PUA if that job offer falls through.
Unfortunately, students who were still searching for post-graduation employment opportunities but are not currently working would not qualify.
The PUA regulations do not clarify how states should base their wage calculation, but DUA guidance states that individuals who were to commence employment but are unable to do so should receive 50 percent of the state’s average benefit. The CARES Act makes clear that these recipients would receive the $600 weekly benefit on top of that base amount. For graduates who were working but also had a separate offer of post-graduate full-time employment that was since rescinded due to COVID-19, their PUA amount should increase from the part-time benefit to the minimum full-time benefit (50 percent of the average weekly benefit, plus the $600).
Other Limitations
Regulations released by the Department of Labor fell significantly short of fulfilling Congress’ aims for the program, limiting eligibility to those workers forced to suspend operations because of government orders, and allowing states to adopt narrow rules. Responding to pressure from advocates and key senators, the Department of Labor has reversed course, stating in a letter to Congress that those gig workers who experience a major drop in demand can get PUA even if they are not barred from offering services. With such confusing signals, it will be up to states, advocates, and workers to advocate for strong coverage.
Young people are more likely to rely on the “gig economy” as a critical source of income.
Young people are more likely to rely on the “gig economy” as a critical source of income. In fact, about 27 percent of contingent workers are under the age of 25, though that age group makes up just 12 percent of the workforce. That means that the implications of state interpretations of Department of Labor guidelines for this segment of workers will disproportionately impact young workers.
Next Steps: Administrative and Congressional Action
Going forward, the Department of Labor should expand and clarify regulations to ensure that students and graduates can access the benefits Congress designed for them under the PUA program. To do so, the secretary of labor should:
- ensure states are appropriately and quickly implementing PUA so that students working part-time can qualify for DUA, even if a state typically disqualifies students because they are not available for full-time work;
- publish further clarifications confirming that working students whose schools force them to move when they closed campus due to COVID-19 would qualify for PUA, regardless of whether their place of work is inaccessible;
- expand existing guidance to ensure that students who worked close to full-time but did not have similar prior year tax filings may receive a benefit on par with more recent work history; and
- further clarify that gig workers can access PUA benefits if their unemployment was either directly caused by COVID-19 or influenced by the economic reverberations from the crisis.
When implemented appropriately, PUA will provide some support for students, but it still will not fill two significant gaps: (1) it will not provide help for people leaving school and now looking for work for the first time, and (2) it will not provide benefits to students who are leaving high school or college and cannot find work due to the economic downturn if their inability to find a job is not directly related to COVID-19. These larger gaps require congressional action.
Before passing the CARES Act, the House of Representatives proposed their own bill, the Take Responsibility for Workers and Families Act, that had a provision critical to solving the first gap: a “job entrants” benefit. The benefit would allow those who are unable to seek employment due to COVID-19 restrictions to access benefits. This would provide a great first step to ensuring that new job entrants are not left with nothing due to no fault of their own.
However, the provision could (and should) go further to solve the second gap—a lack of help for people who enter the workforce for the first time in a flailing economy, even after the mandatory employment closures related to emergency declarations end. A joint proposal published in 2016 from the National Employment Law Project, the Center for American Progress, and the Georgetown Center on Poverty and Inequality called for overhauling the UI system to include a jobseekers allowance, a limited time, minimal benefit to people entering the workforce. Building on that idea, and on the job entrants provision in the House bill, the next stimulus bill should provide a minimum benefit for new graduates who are entering the workforce at a time when job opportunities may be more limited than any time in the past eighty years. Such a provision would:
- automatically trigger and remain in effect when unemployment rises above a certain threshold;
- count school enrollment as a wage history equivalent, automatically qualifying graduating students seeking work; and
- provide a minimum benefit based on existing PUA methodology.
Looking Ahead
The challenge of trying to find work to pay for school, or of graduating into a recession, creates both near-term financial crises and heartbreaking lost opportunity if students are forced to drop out. Immediate administrative and congressional action are necessary to mitigate those harms.
But graduating into a recession also results in long-term financial insecurity, and these changes must be a part of a broader recovery plan that includes young workers. One study found that recession-era college graduates saw their wages impacted for a decade after they graduated, and for students graduating from schools that already provide a lower wage return, they are likely to see the effects even beyond the first decade.
Fixing UI to provide near-term stability for young workers is a critical part of ensuring that this generation has a safety net, but must be a part of a broader economic response to provide work opportunities sufficient to avoid the prolonged unemployment crisis and lasting effects young people faced in the wake of the Great Recession.
header photo: Young men wear face masks while waiting to clean windshields for extra cash amid the coronavirus pandemic in south Los Angeles, California. Source: Mario Tama/Getty Images
Editorial note: This report was updated on May 11th, 2020, to reflect new guidance from the U.S. Department of Labor.
Tags: CARES act, unemployment rate, youth unemployment, unemployment insurance, covid-19
Unemployment Insurance and Young People in the Wake of COVID-19
When Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March, it expanded access to unemployment benefits for a number of workers impacted by COVID-19, and increased the value of those benefits significantly—including for those who typically do not qualify for unemployment insurance (UI). To reach those individuals, Congress created the Pandemic Unemployment Assistance (PUA) program, modeled after the existing Disaster Unemployment Assistance program. PUA will provide workers who lose their jobs or are unable to work due to the pandemic a weekly benefit of $600 on top of a partial wage replacement calculated for their state.
Historically, youth unemployment skyrockets during a recession, but traditional unemployment insurance often leaves these workers out. PUA, however, offers an opportunity to extend help to this population during the pandemic. Many high school students work, although standards for who qualifies for help will hinge on state interpretations of existing regulations that restrict the benefit for certain minors. Fortunately, the CARES Act provisions should provide significantly more relief for college students working their way through college. In total, 11 million college students work; over 8 million of those students, or 75 percent, work twenty hours or more. Of those, over 4.4 million students work thirty-five hours or more.1
States and the U.S. Department of Labor should appropriately implement PUA to ensure young workers receive the benefits owed to them, and Congress should build on these initial steps and expand the options available for students and young people leaving school and entering a recession economy. Specifically, policymakers should:
Recession-Era Youth Unemployment
Students and young people are often left out of unemployment insurance programs, either because they do not have sufficient work history, or because they work part-time and their earnings are too low or do not meet the requirement for part-time benefits under their state’s rules. At the same time, young people often face very high unemployment during economic downturns, and young people of color face the biggest barriers to work. The unemployment for young people during the Great Recession, for example, reached almost 20 percent; for black teens, it was 43 percent. By comparison, the unemployment rate for the general population peaked at 10 percent.
Figure 1
At the apex of the Great Recession, the unemployment rate for 18–24 year olds was 74 percent higher than for the population as a whole. Given current projections that the actual unemployment rate for March 2020 reached 17 percent, a ratio similar to that of the Great Recession would put the unemployment rate for young adults in March at an astounding 30 percent.
Many of the young people who have lost their jobs will be students working their way through school, or supporting their families, and who should be eligible for new benefits.
CARES Act Expansions
The CARES Act provides for both an extension and expansion of benefits for those who typically qualify for UI, as well the PUA program for “covered individuals,” or those not qualified for regular (or extended) unemployment compensation, including those who have exhausted all rights to such benefits, self-employed people, individuals seeking part-time employment, and those with insufficient work history. Those individuals will qualify if they are unemployed, partially unemployed, unable or unavailable to work because the individual:
Recipients qualify for benefits of at least $600 per week, plus the greater of (a) their state’s calculation of a weekly benefit based on their wages, or (b) 50 percent of average benefit in the state. If the person works less than full-time, the amount is prorated by the amount worked. On average, nationally, 50 percent of a state’s median benefit is $190 per week.
The design of PUA will reach far more students than would otherwise qualify for existing UI benefits, including current high school students, college students, and both high school and college graduates.
PUA for College Students
According to the National Center for Education Statistics, 81 percent of part-time college students and almost half of full-time students work; in all, about two-thirds of college students work, and about half are financially independent. In total, about 11 million college students work, and 75 percent work twenty hours or more. Many of these students are first-generation college students and are more likely to come from low-income families than ever before.
Thankfully, many working students who lose their job due to COVID-19 should qualify for some help. About half of states will cover student workers who are still available for full-time work with regular UI benefits. In other states, most students are disqualified from state UI because they are not considered available for full-time work due to their student status (especially if they are full-time). However, the CARES Act creates a new mechanism for states to cover these workers through PUA. Section 2012(a)(ii)(2) of the CARES Act specifies that those individuals who are disqualified from UI by such rules are eligible for PUA, since the program covers anyone who “is self-employed, is seeking part-time employment, does not have sufficient work history, or otherwise would not qualify for regular unemployment.”
However, to receive assistance from PUA, individuals must still be considered able and available for work (within the constraints placed on work during the COVID-19 pandemic). In order to appropriately implement the CARES Act, states will need to adjust their legacy systems to ensure that, given the directive by Congress to cover part-time workers, they will consider students who would be partially available to work due to their student status are eligible to collect PUA—and can do so without burdensome wait times or additional processes./
Some students may also run into some complicating factors. For example, the existing regulations do not account for a student who was forced to move away because their dormitory closed, but whose place of employment stayed open. (Such workers could be considered to have voluntarily quit and ineligible for UI).
Whether these students qualify for state benefits or the new federal PUA payments, they will receive the $600 boost between now and July 31. PUA sets a flat minimum of one-half the state’s average weekly benefit amount, which is very useful for workers with limited work history who might qualify for less based on the state formula alone. However, if the student earned more than the minimum, based on an assessment of the previous year’s taxes paid, they could receive a benefit based on those earnings. This means that students with uneven work history may revert to the minimum benefit, when their most recent earnings could have triggered a higher benefit amount.
PUA for Current High School Students
About 18 percent of high school students ages 16–17 work, and about 9 percent work more than fifteen hours per week.
It is unlikely that a high school student will have worked enough hours, or long enough, to qualify for their state’s traditional unemployment insurance benefits, and they are subject to the same full-time student disqualifications as college students. The CARES Act directly links PUA to Disaster Unemployment Assistance rules unless otherwise specified, and the DUA Manual (ETA Handbook 356) considers the question of high school students. The handbook states that for students under 18, one should consider whether the loss of employment was the individual’s principle source of income and means of livelihood. More specifically, it acknowledges that students assisting with a family business or farm may be critical, and that if the student already qualified for a state’s unemployment insurance program, they would certainly qualify. But it leaves open questions as to how states will assess part-time work or summer work.
If they did qualify, students would receive $600 per week, plus at least the minimum DUA benefit of 50 percent of the average benefit. If their wages were higher, they would qualify for the benefit a state would provide based on their earnings in the prior tax year.
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PUA for High School and College Graduates
Graduation season is rapidly approaching. About 1.2 million high school graduates leave high school each year and do not enroll in college, and about 4 million enrolled in higher education at the undergraduate and graduate level will graduate from their program.
As stated earlier, students who lost a job due to COVID-19 during the academic term and graduate this May or June should qualify based on a job loss, regardless of whether they had a separate offer of employment starting after the academic term.
Students who were not working during the academic term, or who were working but had a separate employment opportunity planned for the summer, may qualify for PUA if that job offer falls through.
Unfortunately, students who were still searching for post-graduation employment opportunities but are not currently working would not qualify.
The PUA regulations do not clarify how states should base their wage calculation, but DUA guidance states that individuals who were to commence employment but are unable to do so should receive 50 percent of the state’s average benefit. The CARES Act makes clear that these recipients would receive the $600 weekly benefit on top of that base amount. For graduates who were working but also had a separate offer of post-graduate full-time employment that was since rescinded due to COVID-19, their PUA amount should increase from the part-time benefit to the minimum full-time benefit (50 percent of the average weekly benefit, plus the $600).
Other Limitations
Regulations released by the Department of Labor fell significantly short of fulfilling Congress’ aims for the program, limiting eligibility to those workers forced to suspend operations because of government orders, and allowing states to adopt narrow rules. Responding to pressure from advocates and key senators, the Department of Labor has reversed course, stating in a letter to Congress that those gig workers who experience a major drop in demand can get PUA even if they are not barred from offering services. With such confusing signals, it will be up to states, advocates, and workers to advocate for strong coverage.
Young people are more likely to rely on the “gig economy” as a critical source of income. In fact, about 27 percent of contingent workers are under the age of 25, though that age group makes up just 12 percent of the workforce. That means that the implications of state interpretations of Department of Labor guidelines for this segment of workers will disproportionately impact young workers.
Next Steps: Administrative and Congressional Action
Going forward, the Department of Labor should expand and clarify regulations to ensure that students and graduates can access the benefits Congress designed for them under the PUA program. To do so, the secretary of labor should:
When implemented appropriately, PUA will provide some support for students, but it still will not fill two significant gaps: (1) it will not provide help for people leaving school and now looking for work for the first time, and (2) it will not provide benefits to students who are leaving high school or college and cannot find work due to the economic downturn if their inability to find a job is not directly related to COVID-19. These larger gaps require congressional action.
Before passing the CARES Act, the House of Representatives proposed their own bill, the Take Responsibility for Workers and Families Act, that had a provision critical to solving the first gap: a “job entrants” benefit. The benefit would allow those who are unable to seek employment due to COVID-19 restrictions to access benefits. This would provide a great first step to ensuring that new job entrants are not left with nothing due to no fault of their own.
However, the provision could (and should) go further to solve the second gap—a lack of help for people who enter the workforce for the first time in a flailing economy, even after the mandatory employment closures related to emergency declarations end. A joint proposal published in 2016 from the National Employment Law Project, the Center for American Progress, and the Georgetown Center on Poverty and Inequality called for overhauling the UI system to include a jobseekers allowance, a limited time, minimal benefit to people entering the workforce. Building on that idea, and on the job entrants provision in the House bill, the next stimulus bill should provide a minimum benefit for new graduates who are entering the workforce at a time when job opportunities may be more limited than any time in the past eighty years. Such a provision would:
Looking Ahead
The challenge of trying to find work to pay for school, or of graduating into a recession, creates both near-term financial crises and heartbreaking lost opportunity if students are forced to drop out. Immediate administrative and congressional action are necessary to mitigate those harms.
But graduating into a recession also results in long-term financial insecurity, and these changes must be a part of a broader recovery plan that includes young workers. One study found that recession-era college graduates saw their wages impacted for a decade after they graduated, and for students graduating from schools that already provide a lower wage return, they are likely to see the effects even beyond the first decade.
Fixing UI to provide near-term stability for young workers is a critical part of ensuring that this generation has a safety net, but must be a part of a broader economic response to provide work opportunities sufficient to avoid the prolonged unemployment crisis and lasting effects young people faced in the wake of the Great Recession.
header photo: Young men wear face masks while waiting to clean windshields for extra cash amid the coronavirus pandemic in south Los Angeles, California. Source: Mario Tama/Getty Images
Editorial note: This report was updated on May 11th, 2020, to reflect new guidance from the U.S. Department of Labor.
Notes
Tags: CARES act, unemployment rate, youth unemployment, unemployment insurance, covid-19