Will unemployment benefits be extended after May unemployment rates?

Over half of US states plan to end or have already ended enhanced federal unemployment compensation early. The latest jobs growth data showed nationally a decrease in the unemployment rate, but noticeable gains were seen in only 21 states.

The US Bureau of Labor Statistics’ May jobs report showed what in normal times would be solid growth with nearly 560,000 new jobs added. However, the numbers missed the expected target and the US economy is still short around 10 million jobs from the pre-pandemic trend in growth. This soothed fears that the economy was growing too fast but means that the jobs gap won’t be closed until August 2023 at the current pace of job creation. Enhanced federal unemployment benefits are set to expire the first week of September 2021 in the 24 states and the District of Columbia that have not yet opted out early.

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Will unemployment benefits be extended beyond September?

There has been a breakthrough in negotiations between Democrats and Republicans on investing in US infrastructure, but the proposal does not include extending unemployment benefits. Getting an investment package on infrastructure has been the main area of focus for the Biden administration since the American Rescue Plan was passed in March. President Biden wants to have a spending packaged enacted before Congress leaves Washington for the August recess.

The $1.2 trillion bipartisan deal still has to work its way through both chambers but President Biden has given it his blessing. The package hammered out by a bipartisan group of 21 Senators dubbed the “G21”, leaves out many of the provisions of the President’s nearly $2.3 trillion original American Jobs Plan, which didn't include extending unemployment insurance either. President Biden has said that he will pursue measures that were left out in stand-alone legislation that House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer said they will try to pass in July as well.

Even if by some chance a measure to extend unemployment benefits were part of a separate bill, states could opt out like the 26 that already have. However, congressional Democrats have signaled that they will most likely let the enhanced benefits expire and focus on making changes to the national unemployment insurance system.

Democrats want to create “automatic stabilizers”

Senators Ron Wyden and Michael Bennet have proposed a revamp of the unemployment system nationwide. Their proposal would modernize the benefits allowing those laid off to access jobless assistance more quickly doing away with the “waiting week,” along with other measures to standardize the patchwork of unemployment insurance systems from state to state.

The extended benefits program would be tied to "economic conditions on the ground,” so that jobless compensation programs like those set up during the covid-19 pandemic would kick in automatically. The Senators don’t specify which economic indicators but the triggers could be unemployment surpassing a certain level, then winding down once again when employment recovers.

“We can’t fail again to fix [our unemployment insurance system] in the wake of the second major economic crisis in 10 years,” said Wyden. “A 21st century economy demands a 21st century safety net that supports workers who lose their jobs through no fault of their own.”