Will enhanced unemployment benefits be extended by Congress? Here's what to know

Protesters rally demanding economic relief during the coronavirus pandemic, at Time Square on August 5, 2020 in New York City.
Angela Weiss | AFP | Getty Images

It's been a week since the $600 weekly enhancement to unemployment benefits, passed in the March CARES Act, expired on July 31. Discussions about what to include in the next round of pandemic relief aid have picked up in recent weeks, with near daily updates about where Congress is heading, as the coronavirus and its economic devastation continue. But the issue of how to extend jobless benefits to tens of millions of Americans remains a key point of contention among lawmakers, slowing the agreement of any deal.

Here's a rundown of what unemployment proposals are on the table, where negotiations stand and what could happen next in the coming days.

What are the different proposals to extend unemployment benefits?

In May, the House of Representatives passed a $3 trillion proposal called the HEROES Act, which would extend the $600 enhanced unemployment aid until January 31, 2021. 

Any individual still receiving only state-administered aid by this date (and not federal aid extended under the CARES Act) would be eligible for a weekly $600 boost until March 31, 2021.

People receiving aid under Pandemic Unemployment Assistance (such as freelancers, self-employed and gig workers) as well as the 13-week benefit extension would continue to be eligible for unemployment until March 31, 2021.

In the $1 trillion HEALS Act introduced by the Senate in July, enhanced federal benefits would be cut down to $200 per week through September. By October, the flat boost would be replaced with a payment that, when combined with regular state benefits, will recover 70% of the worker's previous wages. This calculated federal boost will be capped to a maximum of $500 per week.

States that aren't able to calculate and administer a 70% replacement benefit by October 5 can apply for a waiver to continue paying the $200 weekly benefit for up to two months. The bill doesn't specify what would happen if a state is unable to get the 70% calculation programmed by early December, as enhanced unemployment under the HEALS proposal expires December 31, 2020.

How long will enhanced unemployment last if it's renewed?

Enhanced benefits under the HEROES Act would last until March 31, 2021. Under the HEALS Act, enhanced unemployment will expire December 31, 2020.

Where are negotiations now?

After the House HEROES Act was revealed in May, Senate Majority Leader Mitch McConnell, R-Ky. called the bill "an unserious product from an unserious majority." President Donald Trump called the bill "DOA."

Last week, Democratic lawmakers criticized the Senate's HEALS Act and said it does not do enough to support unemployment insurance; aid for state and local governments; assistance for renters and homeowners; or benefits to help families afford food.

Several GOP lawmakers oppose the Senate plan as written and have introduced proposals with weekly payments of $400 to $500 through September, then an 80% wage replacement through the end of the year.

Republicans proposed the idea of passing a short-term extension of enhanced unemployment while Congress negotiated a broader deal; Democrats rejected the possibility in favor of finalizing a more permanent solution in a holistic stimulus package.

The White House has floated extending the previous $600 a week benefit for a period of time while negotiators hash out a broader deal. On Tuesday, McConnell said he would consider a broader $600 weekly extension if Trump supported it. The Trump administration, meanwhile, offered to extend enhanced federal unemployment insurance at $400 per week through December, NBC News and Politico reported.

Here's how unemployment benefits helped prop up the U.S. economy during a pandemic
Here's how unemployment benefits helped prop up the U.S. economy during a pandemic

When will a deal be reached?

Senate Majority Leader McConnell told CNBC Thursday that he believes Democrats and Republicans will agree on a new relief deal "in the near future."

House Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-NY, have cited progress following several meetings with Treasury Secretary Steven Mnuchin and White House chief of staff Mark Meadows in recent days. However, the four officials emerged from a three-hour meeting Thursday night without a deal

"There are a lot of issues we are close to a compromise position on but I think there are a handful of very big issues we are still very far apart," Mnuchin said.

Meadows has indicated that President Trump intends to extend unemployment insurance and an eviction moratorium by executive action if nothing is decided by Friday. It's unclear what kind of extension would be put into place, and whether the president has the authority to do so, though some see the declaration as a negotiating incentive for Congress to reach a deal by the end of the week.

The next coronavirus relief package is likely to be the last one passed before the November 2020 presidential elections.

Will people get retroactive benefits when a deal is reached?

Experts agree that, whenever a deal is reached, Americans will likely receive that federal boost to benefits retroactively.

"I would expect that it will be retroactive and the state unemployment insurance agencies will have to pay people for the missed weeks," Stephen Wandner, a senior fellow at the National Academy of Social Insurance, told CNBC. "Legislation on unemployment insurance has always been effective upon enactment, and there have been retroactive provisions before."

When the $600 benefit was first passed in March, the Department of Labor specified that "as states begin providing this payment, eligible individuals will receive retroactive payments back to their date of eligibility or the signing of the state agreement, whichever came later."

It took roughly a month before all 50 U.S. states and the District of Columbia began administering the $600 benefit after it was passed, and recipients received a lump sum of back payments for missed weeks.

How many people will be impacted by an extension?

Another 1.2 million people filed new unemployment claims this week, making it the 20th consecutive week where more than 1 million people have filed for jobless benefits. In total, 32.1 million Americans were receiving unemployment benefits as of July 18, the most recent data available from the Department of Labor.

Without any kind of benefit extension, the Economic Policy Institute estimates a resulting economic slowdown would lead to 5.1 million fewer jobs being created over the next year.

CNBC Make It is NOW STREAMING on Peacock. Find our original programming in the Channels section.

Don't miss:

How the HEALS Act compares to the HEROES Act

Unemployment recipients share why they returned to work during the pandemic despite $600 weekly boost

Nearly half of all furloughed workers now believe their temporary layoff will become permanent

7 steps financial experts say to take now that the extra $600 unemployment boost is ending

Ramit Sethi: Here's the approach to take if you don't have money right now
Ramit Sethi: Here's the approach to take if you don't have money right now