Nine months after Congress passed the first stimulus bill to mitigate the economic fallout from the coronavirus pandemic, legislators on Capitol Hill have negotiated a second relief package that, among other provisions, continues the CARES Act's expanded definitions of who qualifies to receive unemployment insurance.
When Congress enacted the $2.2 trillion CARES Act last spring, it redefined unemployment in two ways. First, it opened the unemployment rolls to people who were previously ineligible to apply for benefits, including gig workers, part-time workers, and the self-employed. It also increased the maximum number of weeks people could receive regular unemployment benefits from 26 to 39.
As the pandemic has worn on, the number of claims being paid through the less restrictive program known as Pandemic Unemployment Assistance (PUA) has steadily increased. Since October, the government has consistently written more checks each week for the PUA program than it has for regular unemployment, Labor Department data shows.
PUA has not only been a lifeline to people who would normally be precluded from receiving unemployment assistance, but it has also blunted some of the pandemic's damage to the broader economy, says Wayne Vroman, an economist who studies unemployment at the Urban Institute.
"Most of the money that's received as unemployment benefits gets spent quite quickly," and spending, Vroman says, is the key to economic growth.
To that end, in an effort to put more money in the hands of people who have lost their jobs during the pandemic, the new legislation allows the federal government once again to add bonuses to unemployment benefits paid by the states.
In addition to redefining who could collect unemployment insurance and for how long, the original CARES Act also added a $600 federal boost to unemployment benefits administered by the states. When that bump from the federal government expired at the end of July, President Donald Trump used an executive order to add $400 to state unemployment checks. That second measure expired at the beginning of December.
The new pandemic legislation will add $300 to all unemployment checks issued by states through the spring.
For example, the average weekly unemployment benefit in the U.S. for November (the most recent data available) was almost $320, according to the Labor Department. This new legislation would almost double that weekly payment to $620.
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One area where the new bill differs from previous legislation is in its treatment of so-called "mixed earners" — individuals who file taxes as both wage earners and the self-employed.
Mixed earners typically receive smaller unemployment checks because their benefits are calculated from the job where they earn wages. The new legislation will add $100 a week (on top of the other weekly $300 federal bonus) to their unemployment checks through the middle of March.
The expanded eligibility and the extended unemployment timetable were both set to expire at the end of December. The new legislation extends both measures by 11 weeks. That's worrying, Vroman says, because both programs will most likely need to be extended again, and Congress will likely find itself at another political impasse when they expire in March.
It was necessary for Congress to negotiate an update to the CARES Act, Vroman adds, but the measures enacted this week are not enough to fully mitigate the pandemic's long-term economic damage.
"People will burn right through [the second stimulus] as soon as they get the check," he says. "It's too small to be fully effective as a macro stabilizing initiative, but it's better than nothing."
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