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Trillions for Corporations – Crumbs for You: $600 Lifeline for the Unemployed Evaporates

July 30, 2020

By Steve Wishnia

WASHINGTON—The extra $600 a week in unemployment-insurance benefits that has helped support more than 30 million people who lost work in the COVID-19 epidemic is likely to expire July 31 without being extended by Congress.

“Republicans are forcing millions of Americans off a cliff with just a shredded parachute and leaving essential workers to continue risking their health and lives to keep us safe and our economy running.” — 32BJ President Kyle Bragg

While the House passed a relief bill in May, the $3 trillion HEROES Act, that would have extended the supplement into January, Senate Republicans refused to consider it. They finally introduced their counterproposal, the $1 trillion HEALS (Health, Economic Assistance, Liability Protection and Schools) Act, on July 27. 

The HEALS Act would slash the $600-a-week supplement to $200. It would also end Pandemic Unemployment Assistance (PUA) benefits for self-employed workers on Dec. 31, and cut off funding for states to extend regular benefits for 13 weeks after that.

  “The Republican bill totally fails to recognize the magnitude of the crisis, and it directs money to people who don’t need it and takes money away from people who do need it,” AFL-CIO President Richard Trumka told CNN on July 29. 

“That extra $600 is keeping our economy going” by sustaining consumer spending, he added. When it expires, “35 million people are going to have $600 a week less to spend. Can you imagine the shock that is going to go through our economy?”

McConnell denied that the bill would cut benefits. “Republicans are not proposing to ‘cut’ any relief,” he said in a statement July 28. “Republicans want to extend supplemental unemployment insurance at hundreds of dollars per week. If Democrats block legislation, it will stop altogether.” He said the proposed $200 was “eight times the dollar amount that Democrats established during the last crisis” — the extra $25 a week added between February 2009 and December 2010.

Senate Republicans particularly object to the $600 supplement because many low-income workers are receiving more from unemployment than they were on the job. “Our Democratic colleagues want to pretend it is controversial that taxpayers should not pay people more not to work than the people who do go back to work,” McConnell said.

“There are 14½ million less jobs than there are people out of work, so if people want to get back to work, they couldn’t find jobs anyway,” Trumka responded.

He also noted that the bill would not require the federal Occupational Safety and Health Administration to set new safety standards for preventing infections, but would give employers immunity from liability lawsuits if workers get infected. Plaintiffs would have to prove they were infected because of gross negligence or willful misconduct.

“We’re not negotiating over liability protection,” McConnell told CNBC on July 28.

“With millions of Americans just hours from potential financial freefall,” 32BJ SEIU President Kyle Bragg said in a statement July 29, “Republicans are forcing millions of Americans off a cliff with just a shredded parachute and leaving essential workers to continue risking their health and lives to keep us safe and our economy running.” 

More than 30 million people are now receiving or waiting to be approved for either regular state or PUA unemployment benefits, according to Department of Labor figures analyzed by the EPI. More than 15% of workers in six states and the District of Columbia, including New York and California, are claiming state benefits, the EPI said. The number of claimants for all programs tops 20% in 13 states, although that might be inflated by duplicate reporting of PUA claims.

The HEALS Act would also phase out the $200 supplement by this fall, replacing it with a scheme that would cover the difference between state unemployment benefits and 70% of the worker’s previous income, as long as the federal government didn’t have to pay more than $500 a week. That plan is impossibly convoluted, Michelle Evermore, a senior policy analyst at the National Employment Law Project, told LaborPress.

Most states don’t base unemployment benefits on a simple percentage of the worker’s previous paychecks, she explains. Even for those with standard paychecks, the program would first have to calculate what 100% of their income had been, then how much they were receiving in state benefits, and then the difference between that and 70% of previous income, which would have to be accounted for and paid separately. Figuring out the income of the independent-contractor workers in the PUA program would be even more complex.

“They’re going to have to program the system to do something it’s never done before, all while processing 2 million claims,” Evermore says. “They’re telling states to program a benefit that’s going to end on December 31.”

The 70% formula would also reduce the $200 supplement for lower-income workers. If someone had been making $600 a week before losing their job and collecting $300 in unemployment, they would get only $120 extra. 

Evermore says she doesn’t have a problem with unemployment benefits paying more than what recipients were making on the job. One reason, she says, is that it “doesn’t account for fringe benefits,” such as the health insurance they lost when they got laid off. And by putting more money into the hands of lower-income workers, she adds, it’s “preventing the worst economic harm,” such as people having to choose between paying rent or for medicine.

She says she doesn’t want to speculate on what will happen in Congress, but expects that “something more serious” will be negotiated. 

Senate Minority Leader Charles Schumer (D-N.Y.), who has introduced a bill that would gradually lower the $600 supplement in states where unemployment falls below 11%, issued a press release July 29 that said the HEALS Act “fails to provide support for crucial relief to New York’s families, workers, small businesses, and unemployed.” But he focused more on the bill’s lack of funding for aid to state and local governments, health care, housing, and the Postal Service.

“The Republican COVID proposal has no support for Medicaid, nursing homes, or those with disabilities,” he posted on Twitter. “This is not a serious proposal for the country in the midst of a once-in-a-generation crisis.”

July 30, 2020

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