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$300 unemployment payment: how long could it last and why?

Around 30 million Americans are set to receive an extra $300 per week on top of their unemployment benefit but the scheme could be short-lived.

$300 unemployment payment: how long could it last and why?
Rick WilkingREUTERS

A month has passed since U.S. president Donald Trump signed off the Lost Wages Supplemental Assistance programme as part of a series of executive memorandum to help those who have lost their job during the coronavirus pandemic. The Lost Wages Supplement initiative will give unemployed workers an additional $300 per week on top of their existing benefits. The supplement payments can be made retroactively, back-dated to 1 August.

The program is being financed with $44 billion directly from the Disaster Relief Fund with states having the option to further top up benefits with an extra $100 (25%) although very few states have opted to, or have the means to do so.

The Lost Wages Supplement partially re-establishes the weekly $600 top-up which unemployed workers received as part of the CARES Act bill which ran from March to July. However, it is being reported that the new supplement payments may come to an end just weeks after the program was launched.

According to a recent memo issued by FEMA, 23 states have been approved for grants, enabling them to provide unemployed individuals with an extra $300 - $400 per week on top of their regular unemployment insurance. It added, “As of August 22nd, FEMA has obligated $9.7 Billion in support of Lost Wages supplemental assistance. All approved grant applicants receive an initial obligation of three weeks of funding, with additional disbursements made on a weekly basis”.

That essentially means that the supplement benefits will continue until the $44 billion runs out and some observers have estimated that, judging by the current unemployment figures, the funds will dry up in little over one month. American Action Forum calculates that “those eligible for unemployment insurance would be able to claim the $400 supplement from 1 August to 6 December 2020, or until Homeland Security’s Disaster Relief Fund (DRF) drops to $25 billion. Assuming there are 30 million individuals claiming UI benefits and are eligible for the supplement, that $44 billion from the DRF would only allow the federal contribution of $300 per individual to last 5 weeks”.

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What FEMA say about how long the Lost Wages program will last

FEMA state that grants for lost wages supplemental payments will continue until any of the following conditions are met:

  • FEMA has expended $44 billion from the Disaster Relief Fund (DRF).
  • The DRF balance reaches $25 billion.
  • Enactment of legislation providing supplemental Federal unemployment compensation, or similar compensation, for unemployed or partially employed individuals due to Covid-19.
  • The program end date of no later than 27 December 2020.

Only one state, South Dakota, has declined to take part in the Lost Wages program, as Governor Kristi Noem explained: “My administration is very grateful for the additional flexibility that this effort would have provided, but South Dakota is in the fortunate position of not needing to accept it. South Dakota’s economy, having never been shut down, has recovered nearly 80% of our job losses.” 


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