Why at least 300,000 people in 33 states are losing unemployment benefits earlier than expected

Unemployment filing coronavirus
  • A key tool to provide jobless aid to long-term unemployed people is broken in 33 states, per a new report.
  • The shut-off is affecting at least 300,000 people in at least 33 states, researchers say.
  • The study said unemployment benefits for some claimants could turn off in New York and California.
  • See more stories on Insider’s business page.

A policy instrument designed as a buffer for unemployed Americans is broken in 33 states, according to a new report released Tuesday from the California Policy Lab.

The Extended Benefits program is meant to provide jobless aid to people who exhausted regular benefits in high-unemployment states. Earlier federal rescue packages that Congress approved lengthened the eligibility period for people to get the assistance.

But it appears the program is shutting off because it’s not counting long-term unemployed people collecting emergency federal stimulus aid in a measurement used to gauge the share of the workforce claiming unemployment benefits.

“It’s as if the Titanic had stopped loading the lifeboats because some people had already gotten off of the ship,” TJ Hedin, a co-author of the study, tweeted on Tuesday.

“If these triggers were updated to count all people receiving unemployment benefits, then it would mean benefits would be available to impacted workers for longer durations, which seems sensible during times of extended job losses like the pandemic,” Alex Bell, another co-author of the study, said in a statement.

“Unfortunately, in state after state we see that the counter-intuitive design of the program’s trigger system is causing the exact opposite to happen,” he said.

Some states such as Alabama, Maryland, Ohio, South Carolina and Virginia have experienced an early shut-off of the EB program, impacting around 20% to 30% of jobless claimants.

Researchers warned some people’s benefits could be yanked in California, New York, Massachusetts, Nevada, and New Mexico over the coming weeks. These states have over 30% of claimants receiving aid under the program, the report said.

A $300 weekly federal unemployment benefit is in place until September 6, a key part of President Joe Biden’s recent stimulus law. Unemployment claims last week dropped to a new pandemic-era low, as 576,000 people filed for benefits.

Some Congressional Democrats are pressing to overhaul the nation’s battered unemployment system. Sens. Ron Wyden and Michael Bennet unveiled a plan last week to beef-up state unemployment checks and penalize states who stray from new benefit standards.

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Senate Democrats want to replace most of your lost paycheck with permanently boosted unemployment benefits

Ron Wyden
Sen. Ron Wyden (D-OR).

  • Senate Democrats have unveiled a plan to boost unemployment benefits permanently.
  • The plan aims to replace 75% of a worker’s lost paycheck.
  • It also sets up a $250 weekly benefit for gig workers who don’t qualify for regular unemployment.
  • See more stories on Insider’s business page.

A pair of Senate Democrats introduced a plan on Wednesday to permanently boost unemployment benefits, making state checks larger to cover most of a worker’s lost wages.

The plan from Sens. Ron Wyden of Oregon and Michael Bennet of Colorado would mandate states to replace up to 75% of a person’s income at their last job. It also sets up a $250 “jobseeker allowance” for gig workers and contractors – essentially a weekly benefit that replaces Pandemic Unemployment Assistance so those types of workers are no longer barred from receiving state unemployment.

Gig workers have secured access to unemployment benefits in 2020 and 2021, but only on an emergency basis via the pandemic-related stimulus programs. PUA is slated to end on Labor Day.

“Unemployment programs are critical to helping workers stay afloat during difficult times – but too many workers still struggle to access their benefits in our patchwork of outdated state systems,” Wyden said in a statement.

“This proposal will protect workers by strengthening and expanding benefits, modernize UI infrastructure with needed technology investments, and prepare us for the future by tying benefits to economic conditions” Bennet said.

The plan also requires states to provide a minimum 26 weeks of unemployment benefits, which varies greatly from one state to another. An additional 13 weeks are triggered if the unemployment rate climbs above 6.5% at the national or state level, tying the flow of aid to economic conditions. More weeks would become available if the jobless rate surges.

Under the proposal, states face some tax penalties if they break from these standards. It’s unclear whether the unemployment reforms will eventually form part of Biden’s infrastructure package.

Currently, laid-off workers are eligible for a $300 weekly federal unemployment benefit – on top of state payouts – which end in early September.

Last year, state unemployment offices were overwhelmed with a surge of claims that strained their antiquated systems to the brink. They struggled to implement a $600 benefit, keeping people from accessing critical aid as the economy tanked due to the pandemic. Democrats and labor advocates are seeking to modernize them to prevent similar chaos.

Most Republicans opposed the renewal of boosted federal unemployment benefits as the economy showed signs of recovering. They argued the federal assistance discouraged people from returning to work.

Republican lawmakers in three states are advancing plans to cut the number of weeks unemployed people can get benefits, HuffPost reported.

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Around 2 million people could face delays getting $300 federal unemployment benefits

Unemployment filing coronavirus
A person files for jobless benefits.

  • Around 2 million people could see delays receiving unemployment benefits, including a $300 bonus.
  • It could amount to a two-week delay that hits mostly gig workers and long-term unemployed people.
  • Some states like New York say they can pay out enhanced unemployment aid this week.
  • See more stories on Insider’s business page.

Around two million people could face delays receiving enhanced unemployment insurance, including a $300 federal benefit, despite Democrats approving a $1.9 trillion stimulus plan ahead of government aid expiring for many people this month.

The estimate comes from a new analysis from Andrew Stettner, a senior fellow and unemployment expert at the liberal-leaning Century Foundation.

The delays, per Stettner, could largely hit those enrolled in programs set up in 2020 to provide unemployment relief to freelancers and laid-off workers who depleted regular state jobless payouts: Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation, respectively.

“We do expect some states to have delays, getting those who ran out of benefits back on and even starting up PUA and PEUC again,” Stettner said in an interview. “You can’t get the $300 without those underlying benefits.”

Still, jobless workers may not have to wait for long to receive critical benefits. Stettner said he believed it would be a two-week setback for most, largely because the new stimulus law didn’t make major changes to the flow of unemployment benefits. That makes it easier to administer for overburdened state labor offices.

“It is a simpler program,” he told Insider. “I do think it will go better than it has and some states are indicating as such – that this will go a little more smoothly, but not without hiccups.”

Stettner cited California, which issued a release saying people would be able to certify weeks – one of the steps to obtain jobless benefits – in April.

Around 18 million Americans are still claiming unemployment insurance a year into a pandemic which decimated vast swaths of the economy. Additional research from Stettner and Elizabeth Pancotti, policy director of Employ America, indicated that one in every four workers relied on unemployment at some point during the crisis.

Delays to obtain jobless insurance have been common during the pandemic, particularly early last year as the calamity exposed the antiquated state of unemployment offices across the US. The crush of people filing for emergency aid caused a massive backlog.

The stimulus law approved by Biden and Democrats renewed a $300 federal unemployment until Labor Day on September 6. That’s also the expiration date for PUA and PEUC.

Some states are indicating they are prepared to pay out benefits as soon as this week. The New York Department of Labor said on March 17 there would be no lapse in aid, though the agency posted a tweet Monday notifying people there could be a 1-2 day delay at most.

As the benefit-year ends, unemployed people should expect to continue receiving benefits without applying for them again, Stettner said.

“States should not direct people to reapply, and individuals should not reapply unless they worked since they first got laid-off,” he said.

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More workers just became eligible for unemployment, including those who didn’t return to work over safety concerns

unemployment insurance weekly benefits stimulus checks recession job losses coronavirus pandemic
Carlos Ponce joins a protest in in Miami Springs, Florida, asking senators to continue unemployment benefits past July 31, 2020.

  • On Thursday, the Labor Department expanded eligibility for unemployment benefits.
  • The benefits now include workers who didn’t return to or accept jobs due to COVID safety concerns.
  • But those who quit their jobs over safety concerns aren’t eligible for the expanded benefits.
  • Visit the Business section of Insider for more stories.

The Labor Department expanded unemployment eligibility on Thursday, opening it to workers who didn’t return to work or accept a new position over COVID safety fears.

The new eligibility criteria also extends to school employees who lost work due to closures and people who lost hours or their jobs because of the pandemic.

The move builds on an executive order that President Joe Biden issued in January that widened eligibility for assistance under Pandemic Unemployment Assistance (PUA), which covers those who aren’t eligible for regular unemployment benefits but are unable to work due to the pandemic. 

“There have been tons of workers in this pandemic who’ve been denied benefits because they’ve been offered a job that’s actually not safe,” Heidi Shierholz, the director of policy at the left-leaning Economic Policy Institute, told Insider. 

She added: “One of the key things this does is just makes it very clear that if you get offered a job that is not safe because of COVID risks, you can still get PUA. And I just think that that’s super meaningful.”

Benefits are also retroactive for those who were previously ineligible for PUA, which covers January 27, 2020 and onwards. However, workers who filed after December 27, 2020 can only receive retroactive benefits from December 6 on. 

“This probably helps because there were people falling through the cracks in state unemployment insurance programs,” University of Chicago economist Bruce Meyer told Insider. “And many states were not doing a good job of determining eligibility for unemployment insurance – and many people were not getting the benefits to which they were entitled.” 

Labor Dept. officials told reporters they could not estimate how many people would become newly eligible for jobless assistance. But not every type of worker would benefit from the new guidelines.

“One group who still falls through the cracks are folks who quit their jobs because they were unsafe,” Elizabeth Pancotti, policy director of Employ America, said in an interview. “If you quit your job because you felt unsafe at work, technically you’re not covered by this expansion.”

Millions still unemployed

Thursday’s jobs report showed some slight recovery for unemployment. Weekly jobless claims dropped to 730,000, lower than some economists anticipated. The numbers of Americans with continuing claims – those still filing for unemployment – dropped to 4.4 million.

But millions of Americans remain unemployed with a $300 federal unemployment benefit expiring in mid-March. The official jobless rate stands at 6.3%, though Federal Reserve officials say it is likely near 10% after factoring in certain trends. 

Throughout the pandemic, low-wage workers, women, and workers of color have all been disproportionately impacted by job losses. According to the National Women’s Law Center, women are down over 5.3 million jobs since the pandemic’s onset – and many may have dropped out of the labor force altogether.

Regardless, the updated eligibility will cover a larger swath of workers, while potentially illustrating larger problems with the distribution of unemployment benefits.

“It’s a desperate measure in the face of a failure by state agencies to effectively administer the law,” Meyer said.

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Trump will cost jobless workers a week of $300 federal unemployment benefits if he doesn’t sign the relief bill by the end of Saturday

Trump
  • The president could cost jobless workers a week of $300 federal unemployment benefits if the relief legislation is not signed by midnight Saturday.
  • State agencies can only distribute benefits for weeks the legislation is enacted, experts say.
  • Nearly 14 millions Americans are threatened with the loss of all their unemployment aid this weekend.
  • Visit Business Insider’s homepage for more stories.

President Donald Trump has suggested he may reject the $900 billion coronavirus relief package that Congress approved earlier this week unless lawmakers include $2,000 stimulus payments. He still hasn’t signed it into law and has given few indications of which direction he’ll swing.

The continued delay endangers a broad range of federal assistance programs in the legislation as well. It could prove costly for millions of Americans receiving unemployment benefits since they were supposed to restart December 26.

If Trump doesn’t sign the federal rescue package by the end of Saturday, it would effectively cut a week of $300 federal unemployment benefits for jobless people, according to Michele Evermore, a policy expert at the National Employment Law Project.

However, she cautioned it’s hard to project without federal guidance how the holdup would affect other unemployment programs. 

“I’m not entirely sure how this will be interpreted – at the very least, we lose a week of the $300,” Evermore told Insider. “No matter what, if he doesn’t sign, next week it goes down to 10 weeks of an extra $300.”

Experts like Evermore say a two-to-three week gap in unemployment benefits is inevitable since states also need time to recalibrate their computer systems.

States can’t provide benefits for weeks before the relief legislation is actually approved. Depending on when it’s signed, that could put labor agencies on track to restart the payouts during the first week of January. The $300 federal supplement would still end on March 14, setting up only a 10-week extension instead of 11.

Trump’s move also threatens to financially devastate millions of Americans heading into next year. Saturday is the last day that two federal unemployment programs distribute their payments. They are the Pandemic Unemployment Assistance for gig workers and freelancers and Pandemic Emergency Unemployment Compensation for people who exhausted state benefits.

That pair of programs set up under the CARES Act in March cover 14 million people and expire this month. The president’s calendar has no public events listed for the weekend. The White House did not respond to a request for comment.

The president maintained his position in a tweet on Saturday morning, saying he wanted to increase stimulus payments and remove unrelated provisions from the large tax-and-spending package.

“I simply want to get out great people $2000, rather than the measly $600 that is now in the bill,” Trump tweeted. “Also, stop the billions of dollars in ‘pork’.”

On Tuesday evening, Trump threatened in a video posted on Twitter to derail the $900 billion coronavirus relief package alongside the government spending bill it was paired with to accelerate their passage. He blasted provisions in the funding legislation such as money for the Kennedy Center, though his budget request had allocated funds for it.

The development stunned lawmakers on Capitol Hill, who had expected the president to sign the legislation given the White House’s public statements on it. Trump had largely delegated relief negotiations to Congressional leaders for months.

The coronavirus relief legislation contained $600 direct payments, $300 weekly federal unemployment benefits, funding for food stamps and rental assistance, and small business aid among other measures. It passed Congress with a strong bipartisan majority on Monday evening, which could potentially pave the way for a veto override.

In a bit of political jockeying, House Democrats on Thursday swiftly attempted to advance a measure to approve $2,000 stimulus checks. But House Republicans immediately blocked it. Speaker Nancy Pelosi assailed the GOP move and vowed to bring up the legislation for another vote on Monday.

Republican Sen. Lindsay Graham, a top Trump ally in Congress, suggested the president was holding firm on his position on Saturday afternoon.

“After spending some time with President @realDonaldTrump today, I am convinced he is more determined than ever to increase stimulus payments to $2000 per person and challenge Section 230 big tech liability protection,” Graham tweeted.

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