The COVID-19 pandemic has caused millions of American workers to become either furloughed or unemployed, but thanks to the additional unemployment income provided by the CARES Act, many have been able to make ends meet.
Unfortunately, the $600 weekly unemployment supplement that has been in effect for nearly four months is set to expire at the end of this month, so this could be the last full week of enhanced benefits unless Congress acts quickly. Most states offer standard unemployment benefits that max out in the $300-$400 range per week, so this would mean a major pay cut for millions of people.
Will the $600 unemployment boost continue?
The good news is that politicians on both sides of the aisle largely agree that something needs to be done to help the 11% of American workers who are currently unemployed. But there's a big disagreement when it comes to what.
Democrats want to continue the $600 weekly boost as it currently stands. The HEROES Act stimulus bill, passed by the House of Representatives, would continue the $600 supplement through the end of January 2021.
On the other hand, Republicans generally aren't in favor of keeping the unemployment boost in its current form. The simple explanation is that many people are currently making more money while unemployed than they were when they were still working, and the idea is that this could be a disincentive to go back to work.
Whatever the final outcome, it's in the best interest of the U.S. economy to make sure that unemployed workers can continue to cover their living expenses and other bills without having to run up credit card debt or tap into retirement savings.
Here are (some of) the possibilities
With that in mind, there are several possible outcomes of the current round of economic stimulus negotiations when it comes to unemployment benefits.
- Keep the $600 weekly boost as it stands. As you may have gathered from reading the last section, this isn't particularly likely, especially through early 2021 like the HEROES Act calls for.
- Keep the $600 weekly boost, but with restrictions. As mentioned, one of the biggest issues Republican lawmakers have with the CARES Act unemployment boost is that many people are making more than they were while they were working. So the next stimulus bill could provide a $600 maximum boost, with total unemployment benefits limited to 100% of pre-unemployment income.
- Adopt a lower unemployment boost. Some have suggested keeping the unemployment supplement in place across the board, just at a lower amount. A $300 weekly boost instead of $600 has been mentioned by several lawmakers as a possibility, but an amount between the two is possible, as well. Treasury Secretary Steven Mnuchin recently said that the GOP's plan includes an unemployment boost based on 70% wage replacement.
- Keep some sort of boost, but give return-to-work bonuses. Republicans in the House and Senate have mentioned return-to-work bonuses as a way to incentivize people to rejoin the workforce. One proposal by Rep. Kevin Brady (R-Texas) suggests a $1,200 bonus for workers who start a new job. This could be used as a stand-alone provision but would likely accompany some form of unemployment-benefit boost.
- Gradually reduce the $600 weekly boost. Senators Chuck Schumer (D-N.Y.) and Ron Wyden (D-Ore.) recently proposed keeping the unemployment boost at $600 for as long as the three-month average in a state's unemployment rate exceeds 11% and reducing it by $100 for every percentage point decrease below that -- meaning that it would disappear completely once unemployment fell below 6%. It's unclear if such a proposal would gain significant bipartisan traction.
Time is a major factor
Almost as important as what will be done to help unemployed workers is that it's done in a timely manner. As it stands now, although the $600 unemployment boost technically expires on July 31, unemployment benefits are generally done according to the calendar week, so this is the last full week it will be applied.