Unemployment benefits

Unemployment benefits: will Biden extend the federal payment?

The $300 weekly benefit is ending federally on September 6, but the White House is yet to decide whether to extend them or not.

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Unemployment benefits: will Biden extend the federal payment?
Jonathan Ernst Reuters

For those relying on the unemployment benefit, what the President decides to do with the payments is very important. The extra payments were first instigated with the CAREs act of March 2020, but the amount has reduced from $600 to $300 a week. There are many on the progressive wing of the Democrat party which would like to see the payments continue, while Republicans are vehemently opposed to any extension. Back in July, 26 states tried to cut off the federal support early, but many were hit with lawsuits from concerned citizens that forced the payments to continue .

As of publication, 3.2 million people are currently receiving unemployment benefits.

Will it be extended?

Biden has signalled in the past that he was happy to let the extension end as was meant to in September. However, with positive news about Americans getting back in jobs and the threat of covid-19 it appears there has been a rethink from the President. In a recent White House press conference, Jen Psaki said that Biden, "hasn't made a decision to extend it, he also hasn't made the decision not to."

“At this point they’re expiring at the beginning of September. Nothing has changed on that front. But a final decision has not been made."

What is the unemployment rate in the US?

The latest figures showed that the unemployment rate stands at 5.4%, the lowest since before the covid-19 pandemic. The country had nearly a million more people on nonfarm payroll. These numbers bode well for the future but only if the strength of the economy can be sustained.

How might covid-19 affect the decision to extend the benefits?

One of the risks with ending the extra benefits early is the rise of the Delta variant of covid-19. Despite just over 50% of the US population vaccinated, there has been a worrying rise in cases. The new variant is much more infectious than previous variants. It has forced some states to reimpose some restrictions and others to pressure federal workers with a vaccine mandate.

Elizabeth Forsythe, economist and assistant professor at the University of Illinois, has said: “It’s certainly possible we could have another round of economic contraction in certain areas if there’s an outbreak… And the unemployment system won’t be there for people the way it’s been over the past year.”

States have already seen rising cases and August 6 saw more than 124,000 of them. This is the highest level of new cases since February 11 but the last time cases were rising this quickly they peaked at 253,000 a day in January. The peak may not be as high this time due to the vaccine rollout, but there is a great risk of business closures and job losses come the winter.

Why did some states end it early?

Some 26 states cancelled the benefits early, arguing that they were withholding unemployed people from rejoining the workforce, but this claim is disputed. In fact, job growth has been shown to be slower in the states which ended the benefits early.

States ending benefits that saw an increase in unemployment from April to June 2021

State

Unemployment Rate

April 2021

June 2021

Change

Ohio

4.7 5.2 +.5%

Iowa

3.8 4 +.2%

Florida

4.8 5 +.2%

Missouri

4.1 4.3 +.2%

Indiana

3.9 4.1 +.2%

South Dakota

2.8 2.9 +.1%

New Hampshire

2.8 2.9 +.1%

Arizona

6.7 6.8 +.1%

After they withdrew from the federal plan there were many legal problems after residents challenged the states in court. The governments in Indiana and Maryland were forced to continue their payments after successful lawsuits.