CORONAVIRUS

$600 unemployment benefits boost: next stimulus bill needs to hurry

Amid high unemployment due to the coronavirus crisis, CNBC has reported that a renewed program of expanded benefits in the US may face delays if it isn't approved by 25/26 July.

$600 unemployment benefits boost: next stimulus bill needs to hurry
JOE RAEDLE AFP

Unemployed Americans may face a wait for extra jobless benefits even if they are included in the next coronavirus relief package, it has been reported.

CARES Act benefits boost finishes at end of July

Under the CARES Act, a $2.2tn stimulus bill signed into law in March, claimants in the US have been receiving an additional $600 a week as part of the Federal Pandemic Unemployment Compensation (FPUC) program - a scheme that is due to run out at the end of July.

A six-month extension to the $600 benefits boost was included in the HEROES Act, a $3tn relief bill approved by the House of Representatives in May, but the package has come up against Republican resistance in the GOP-controlled Senate.

"Even in states with modernized systems, it could still take weeks"

US lawmakers are set to discuss a new stimulus bill when Congress returns from a two-week recess on 20 July - less than a week before states process the final batch of CARES Act expanded jobless payments, on 25th and 26th. If a bill featuring extra benefits is not rubber-stamped by then, says CNBC, delays can be expected.

“What’s going to happen is on 25 [July], states will stop paying the $600 and will have to turn that function off in their computer system,” Michele Evermore of the National Unemployment Law Project told the media outlet. “To get it started back up again, it may take a while to reprogram. I’ve been told that even in states with modernized systems, it could still take weeks.”

Bill expected “sometime within the next three weeks” - McConnell

Speaking on Monday, Senate Majority Leader Mitch McConnell offered little cause for optimism that a bill will be finished in time to prevent this from happening. "When my members come back next week we'll start socializing it with them, begin to discuss it with the Democrats and start the legislative process," he said, according to CNN.

"I think you can anticipate this coming to a head sometime within the next three weeks, beginning next week."

Expanded benefits unlikely to be $600

If it is approved, it seems likely that a new scheme of expanded benefits will be less generous than its CARES Act counterpart. Indeed, McConnell last week described the $600 weekly figure as a "mistake”, voicing Republican concerns that it has discouraged some from seeking work by paying them more than they normally earn.

"Unemployment [pay] is extremely important,” the Republican senator from Kentucky said, “and we need to make sure, for those who are not able to recover their jobs, unemployment is adequate.

"That is a different issue from whether we ought to pay people a bonus not to go back to work. And so I think that was a mistake. And we're hearing it all over the country that it's made it harder actually to get people back to work."

Speaking to CNBC, meanwhile, US Treasury Secretary Steve Mnuchin has said post-July benefits are expected to be “no more than 100% [of a worker's usual salary]”, adding: "We want to incentivize people to go back to work.”

Unemployment rockets in US amid coronavirus crisis

Unemployment has soared in the US as a result of the economic impact of the coronavirus pandemic. The country’s jobless rate rose to 14.7% in April and, although it has since gone down, it remains at 11.1% - almost 8% higher than February, when it was just 3.5%.

Against this backdrop, recent research by Columbia University’s Center on Poverty and Social Policy has found that CARES Act measures such as stimulus checks and expanded benefits have had a significant effect on the finances of American households. Indeed, the CPSP says poverty in the country could have risen from 12.5% to 16.3% without the stimulus money.

However, if high rates of unemployment continue into August, the CPSP has warned, "additional income support will be needed" to prevent a spike in the number of people in the US experiencing economic hardship.

Live coverage of the coronavirus pandemic

As of 08:00 ET on Friday, there had been 3,576,430 coronavirus cases in the United States, leading to 138,360 deaths. You can follow live, US-focused coverage of the Covid-19 crisis by reading our dedicated rolling feed.