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The deadline is looming. The $600 extra weekly unemployment benefits checks that millions of Americans are getting are about to expire. They were part of the first COVID-19 relief package passed by Congress.
When will Congress decide whether to extend them?
That decision is expected to come by August 7. However, it probably won’t come before the expiration deadline.
Here’s how it all works: The Democratic-controlled House extended the benefits in its own relief package for coronavirus. However, the ultimate decision rests in the hands of the Republican-controlled Senate. Whether to extend the benefits – and in what amount – is something that will be negotiated and perhaps included in the second stimulus package, which Republicans plan to take up the week of July 20, 2020.
“These emergency unemployment benefits have been propping up families and propping up the economy now for several months, said Kali Grant, senior policy analyst at the Georgetown Center on Poverty & Inequality, to CNN. “Ending the benefits prematurely will really set back any economic recovery that may have been on the way.”
You should expect that any second check might be smaller than $600, though, because some Republicans have voiced concern that the $600 figure took away people’s incentive to work. There’s also a possibility that the checks could take a different form, say as return-to-work bonuses.
Top Republicans, including President Donald Trump, have indicated some measure of extended benefits might be possible, albeit possibly a smaller amount.
Technically, the extra benefit (which comes on top of unemployment people receive from states) expires on July 31, but because of the way states process payments, they’re likely to stop going out July 25 for all states but New York, which has a July 26 expiration date, according to CNBC.
Congress returns to session on July 20. The week starting July 20, Senate Republicans are expected to introduce their proposal for a second stimulus relief package, which will give us the first concrete sense of their starting point on extending unemployment benefits. The Senate goes into its Senate recess on August 7, so that’s the date by which the plan needs to be approved. The Senate comes back into session on September 8, according to Forbes.
Here’s what you need to know:
Administration Officials Have Warmed Up to the Idea of Extended Benefits, But the Amount Could Be Lower
GettyWhen does the $600 unemployment benefit expire.
According to The Los Angeles Times, Treasury Secretary Steven T. Mnuchin and Trump administration economic advisor Larry Kudlow have recently indicated that there might be some extension of the benefits.
They might not be $600 though. The Times reported that one possible compromise is approving extended benefits but lowering them to $200-$400 instead of $600 per week. The lower amounts could be wedded to another stimulus check to Americans, perhaps of $1,200, although whether there will be a second round of stimulus checks also remains to be seen.
According to The Washington Post, top Trump administration officials have telegraphed recently that they’re open to an extension, but not $600. They include Trump, through a spokesperson, and Kudlow.
Some Republicans believe the $600 extra weekly benefit provides too much of an incentive not to work. According to the Post, Mnuchin said on television that the administration wants to make sure extended benefits wouldn’t exceed 100% of the worker’s past wages.
Even if Congress authorizes extended benefits, there could be a gap between the expiration date and benefits kicking in again.
“What’s going to happen is on [July] 25, states will stop paying the $600 and will have to turn that function off in their computer system,” Michele Evermore, senior policy analyst at the National Employment Law Project, told CNBC.
“To get it started back up again, it may take a while to reprogram. I’ve been told that even in states with modernized systems, it could still take weeks.”
Republicans are watching unemployment numbers carefully. According to Forbes, the unemployment numbers released July 16 showed only a small decline from the 1.31 million filed the week before. That’s good news for those hoping for another round of extended unemployment benefits.
Two former Federal Reserve Chairs have advocated for extended benefits. “I think, frankly, it would be a catastrophe not to extend unemployment insurance,” Janet Yellen told NBC News. Ben Bernanke joined in the call for an extension of the benefits, according to The Hill.
However, according to ClickonDetroit, Senate Majority Leader Mitch McConnell said any extended plan won’t likely pass before the first extension expires.
There Remains Some Republican Opposition to Extended Benefits
Getty U.S. Treasury Secretary Steven Mnuchin speaks to the media while flanked by White House National Economic Council director Larry Kudlow in the briefing room at the White House on July 2, 2020 in Washington, DC.
Some Republicans remain opposed to the idea of extended benefits. “You’re trying to take care of people unemployed; I’m trying to get them back to work,” said Rep. Blaine Luetkemeyer (R-Mo.) to The Hill.
According to Time Magazine, some Republicans prefer a “return to work bonus” instead of extended unemployment benefits. Kudlow is one of those, according to Time.
Mnuchin has indicated he prefers if any extended benefits don’t exceed 100% of a person’s past wages, The Post reported.
“The Coronavirus Aid, Relief, and Economic Security Act (CARES) Act substantially expanded Unemployment Insurance (UI) in order to help workers losing jobs as a result of the Covid-19 pandemic. One provision of the act creates an additional $600 weekly benefit known as the Federal Pandemic Unemployment Compensation. The size of the payment—$600—is designed to replace 100 percent of the mean U.S. wage when combined with mean state UI benefits,” a working paper from researchers with the University of Chicago explained in May.
Research from the University of Chicago gave some ammunition to people who oppose the $600 weekly benefit’s extension.
The University of Chicago article found that:
68% of unemployed workers who are eligible for UI will receive benefits which exceed lost earnings. The median replacement rate is 134%, and one out of five eligible unemployed workers will receive benefits at least twice as large as their lost earnings. Thus, the CARES Act actually provides income expansion rather than replacement for most unemployed workers. We also show that there is sizable variation in the effects of the CARES Act across occupations and across states, with important distributional consequences. For example, the median retail worker who is laid-o can collect 142% of their prior wage in UI, while grocery workers are not receiving any automatic pay increases. Janitors working at businesses that remain open do not necessarily receive any hazard pay, while unemployed janitors who worked at businesses that shut down can collect 158% of their prior wages.
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