Deal won’t save many from benefits lapse
Even though Congress struck a COVID-19 stimulus deal late Sunday to extend badly needed financial relief to millions of jobless Americans, some could see their unemployment benefits lapse because it may take weeks for aid to reach them due to outdated state systems, experts say.
The lag could affect 12 million Americans who were set to lose their jobless aid the day after Christmas if Congress didn’t pass new legislation.
“We’re too far gone,” said Elizabeth Pancotti, a policy adviser at the proworker Employ America. “We would have needed a deal before Thanksgiving for there not to be a lapse in benefits.”
For those whose benefits were going to expire Saturday, their regular benefits and $300 supplement could face delays for at least three weeks, or a maximum of six to eight weeks in some states, Pancotti estimates.
“People will expect to see the extra $300 hit the first week of the year, but that’s not going to happen,” she said.
Why? Because of difficulties in programming new benefits into computer systems during the holidays, according to Michele Evermore, senior researcher and policy analyst for the National Employment Law Project.
The longstanding neglect of state administrative systems has meant state programs don’t have the resources and technology needed to add programs instantly, says Evermore, who expects it will take at least two to three weeks before states are up and running with the new aid.
“We’re just one week from expiration. Maybe a handful of states could pull off a miracle since they knew this was coming down the pipeline,” Evermore said. “But they can’t engage the system until it’s official.”
In March, the CARES Act created two programs to help keep jobless workers afloat after the coronavirus pandemic battered the global economy and led to a historic wave of unemployment. The two programs were set to end Saturday.
The first was the Pandemic Unemployment Assistance program, which provides aid to self-employed, temporary workers and gig workers. It had included a $600 weekly supplement for jobless workers through late July.
Many out-of-work Americans have already used up their state unemployment aid, which typically expires after six months. Now they have transitioned to the Pandemic Emergency Unemployment Compensation program, which provides an additional 13 weeks of benefits beyond the typical 26 weeks states provide to jobless workers.
Only 2.9 million of those running out of PEUC will be able to collect extended benefits – which last an additional 13 to 20 weeks – in 2021, but states will have to pick up half of the cost at a time when their trust funds are depleted, according to The Century Foundation, a think tank.
For those now on extended benefits, it could take three to four weeks before they receive the extra $300, according to Pancotti.
With Congress set to pass an extension of the programs, states will have to wait for the Labor Department to issue guidance before sending out payments, which could prove challenging during the holidays.
It could take states a few weeks to restart the weekly jobless supplements, unemployment experts say. That happened in the spring when it took many states more than a month to roll out the extra $600 weekly benefit in the spring. The benefit ended in late July.
States also faced weeks of delays in August when President Donald Trump extended the bonus to $300 a week for roughly six weeks for most workers.
The takeaway for unemployed Americans is that they may have to wait through part of January to get access to benefits that stopped at the end of December. Benefits are typically restored beginning the date of enactment, so there shouldn’t be a gap in someone’s eligibility, just a gap in when they will get paid, Evermore said.
The Labor Department said Thursday that the number of benefit applications increased to 885,000 from 862,000 the previous week. It showed that nine months after the virus paralyzed the economy, many employers are still slashing jobs as the pandemic forces more business restrictions and leads many consumers to stay home. The number of claims was much higher than the 800,000 that economists had expected.
Before the coronavirus erupted in March, weekly jobless claims had typically numbered only about 225,000. The far-higher current pace reflects an employment market under stress and diminished job security for many.
The total number of people who are receiving traditional state unemployment benefits fell to 5.5 million from 5.8 million. That figure is down sharply from its peak of nearly 23 million in May. It means that some jobless Americans are finding jobs and no longer receiving aid. But it also indicates that many of the unemployed have used up their state benefits, which typically expire after six months.
With savings depleted, American families will be at high risk for food insecurity and loss of their homes, and many may be unable to pay for health care during the pandemic, experts say.
“My biggest concern is that some struggling Americans may panic if they stop getting an unemployment check and do something drastic like sell their car,” Evermore says. “I want them to know that they will still get their checks, it just may take a few weeks.”