Unemployment Benefits

What is the unemployment reform proposed by the Democrats $3.5 trillion bill?

The $3.5 trillion package currently stuck in Congress has a long way to go before it can get passed and lawmakers are looking for an overhaul of the system.

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What is the unemployment reform proposed by the Democrats $3.5 trillion bill?
Elizabeth Frantz Reuters

When the pandemic began in the United States back in March last year, Congress quickly passed the CAREs Act, which made significant changes to unemployment insurance. Through two main programs, Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC), the federal government was able to extend the number of weeks those unemployed could claim benefits and increased the value of their benefits.

The PEUC also entitled unemployed workers to an extra $300 a week. But these programs ended on Labor Day, throwing millions of Americans into financial peril before the pandemic had ended. Some 26 states had already ended the federal programs early, hoping for a bounce in employment, but this hasn't materialized.

Now politicians want some of these benefits to continue beyond 2021.

What is the Unemployment Insurance Improvement Act?

The three Democrats pushing for enhanced benefits are Finance Committee Chair Ron Wyden, D-Ore.; Michael Bennet, D-Colo.; and Sherrod Brown, D-Ohio. Despite their push last week, changes to unemployment benefits are not in the initial bill, but there are still many changes that could happen to it.

“This proposal makes a down payment on long-overdue reform to our unemployment system, and was designed to fit in our upcoming package,” Wyden said. “Importantly, it would slow the race to the bottom on benefits, ensuring six months of benefits and coverage for part-time workers."

The changes would ensure states cover 26 weeks of benefits and part-time workers, and ensure states are not able to discriminate against workers by determining eligibility based on old wage records. Many states already have 26 weeks of benefits, but some others don't. These are Alabama, Arkansas, Florida, Idaho, Kansas, Missouri, North Carolina and South Carolina. The lowest number of paid weeks is North Carolina, with just 13 weeks of support. All these states have unemployment rates below the national average as of the August figures.

Will it be included in the $3.5 trillion bill?

Any changes to unemployment benefits would prove costly and, due to the makeup of the Senate, any increase in price is likely to be flatly denied. Both Democrats and Republicans are split 50-50 in the Senate and two Democrat senators, Joe Manchin and Kristen Sinema, have balked at the cost of the bill. They both prefer something closer to $1.5 trillion, barely a quarter of the initial plans for a $6 trillion bill.

This relatively small amount has also been rejected by progressives. They feel further betrayal by their party due to the splitting of the bipartisan infrastructure and $3.5 trillion bills. The plan had been to pass them together to get Biden's entire agenda through, but they have now been split in an attempt to get them over the line.

Moderates and progressives are at each other's throats over the bills and unless they are passed before the end of October then there could be serious repercussions for Americans who would benefit from the bills, as well as Democrat chances of winning the midterm elections in 2022.