New $300 boosted unemployment arrives in Arizona, but not without headaches and confusion

Yuko Smith photography | Getty Images

Arizona was among the first states to be approved to issue the new $300 per week in federal unemployment benefits established by President Trump's August 8 memorandum. The state, which pays a maximum of $240 in benefits per week (one of the lowest in the nation, just above Mississippi and Puerto Rico), began administering the boosted aid last week.

But for many residents, the arrival of the supplemental benefit isn't without headaches and confusion.

The Trump memorandum, which cut enhanced unemployment from the CARES Act's $600 benefit down to $300 in federal aid each week, applies retroactively to August 1. Many Arizonans aren't seeing the back payments hit their accounts like they were told to expect.

Many Arizonans aren't receiving $300 weekly back pay for August

Emma Locarnini, 42, tells CNBC Make It she saw just one $300 payment, minus taxes, hit her prepaid debit card account last week, rather than a lump sum of three weeks of boosted pay retroactive to August 1. The same thing happened again for her payment this week, which she receives on Mondays.

The Tuscon, Arizona, resident has been out of work since the resort where she works shut down in late March. She applied for unemployment benefits as soon as she was eligible and received payments after five weeks of waiting.

With the previous $600 federal boost, along with her maximum $240 benefit from Arizona, Locarnini says she earned just about as much on unemployment as her previous job as a conference services manager. Unlike critics who said the $600 enhancement discouraged people from going back to work, Locarnini found the opposite to be true.

"It's frustrating — so much of losing my job is totally out of my control, and I don't like not knowing when I might be able to go back to work," she says. "I'm certainly looking for work elsewhere, but I am competing with so many people. I want to work. I want to be back in the office. I don't want to keep relying on unemployment."

With roughly 100% replacement of her lost earnings, Locarnini and her husband, who was furloughed in March but went back to work full-time in late May, have stretched their income by trimming their food, entertainment and travel spending. Locarnini says she's thankful they do not have the stress of caring for children, and their main expense is a monthly $1,600 rent payment.

"It's a day-by-day thing," Locarnini says. "We don't know what will happen three or six months down the road, but it might be more worrisome later."

Others who rely more heavily on the federal unemployment enhancement are feeling the stress of its absence now. According to reporting from AZCentral, Arizona's Department of Economic Security (DES) said last week it was "working to provide retroactive payments ... and anticipates beginning those payments later this week."

On Monday, DES spokesperson Brett Bezio wrote in a statement to CNBC Make It that the state "will finish distributing all retroactive payments within the next couple of days. Due to the number of payments to be issued, we issued retroactive payments in batches over several days. DES anticipates receiving funding on a week-by-week basis, and will make payments until federal funding is exhausted."

The federal program, known as Lost Wages Assistance, is being funded by $44 billion set aside by the Federal Emergency Management Agency (FEMA). States must apply to FEMA for a grant to fund an initial three weeks worth of benefits. Subsequent weeks of aid are approved on a week-to-week basis so long as funding is still available.

That means, for many Arizona residents, boosted payments this month may be gone just as soon as they arrive.

Tens of thousands still wait for unemployment aid

Of course, that's if unemployment benefits ever make it out to them.

Nearly six months into the pandemic and its ensuing unemployment crisis, thousands of Arizonans have yet to see a cent of jobless aid as the state unemployment office works through a crushing backlog of applications. Last week, the DES released roughly 90,000 Pandemic Unemployment Assistance (PUA) applications that had been previously approved but then flagged for potential fraud and put on hold for payment for up to 10 weeks.

The department said it paid more than $730 million in delayed PUA benefits to self-employed, contract and gig workers last week, with some deposits likely exceeding $8,400. With these applications finally processed, an estimated 500,000 Arizonans are currently receiving unemployment benefits. 

But as of Sunday, more than 26,000 Arizona unemployment claims sat in a backlog waiting to be reviewed by an adjudicator for payment.

Colin Smith, 34, first filed for unemployment when he lost his job with a cannabis company in February, which shut down as a precautionary measure to the coronavirus outbreak before widespread closures due to the pandemic. Every time he's filed a claim since, he's notified that his application has been disqualified and he must fax in additional paperwork to verify his employment history.

"It's a broken system," the Gilbert, Arizona, resident says. "I keep continuing to file assuming they'll eventually pay me. This is money I already paid into the system — this is my money, and I need it now. Why is this process so hard?"

Adding to the frustration is that Smith recently qualified for Supplemental Nutrition Assistance Program (SNAP) benefits, which he says required many of the same documents to verify his employment history. He says he was approved for SNAP benefits the same day he applied. He estimates he's spent roughly 300 hours trying to get through the unemployment process.

In addition to accessing food stamps, Smith says he deferred his $700 monthly payments on his private student loans, cut down his utilities usage, stopped driving his car and borrowed money from his mother. He lives with his fiancee, who is still working full-time for a custom home builder.

Earlier this month, President Trump signed a memorandum to defer federal student loan payments and set the federal student loan interest rate to 0% through the end of the year — but approximately 9 million borrowers who have private student loans will not get total relief under the new rule.

"I've had to change everything," Smith says about making ends meet with no income or jobless benefits. "It's been so long, my deferment period is coming to an end. I have a student loan payment due next week, and I won't have unemployment benefits before then."

Smith is grateful to have help from family during this time.

"I never thought at 34 I'd be relying on my mom to pay my cellphone bill," he says. "I went through two economic crashes in my lifetime, and my story's not unique. So many people have the same story and struggle that we've got to do better. We have to fix some of these broken systems like unemployment."

Other workers may never see the $300 weekly boost, as the new enhancement applies only to workers who receive at least $100 in regular unemployment. The requirement, which the Trump administration is an effort to curb fraud, will exclude an estimated 1 million of the lowest-paid workers nationwide.

Enhanced unemployment ends in December unless Congress passes a new deal

As of Monday, the majority of states were approved for the federal unemployment supplement. Only Kentucky and Montana have agreed to kick in an additional $100 in state funds for a total boost of $400 per week to unemployed residents. South Dakota Gov. Kristi Noem has said the state will not pay the extra unemployment benefit at all.

According to the president's order, the federal lost wages program will run until December 6; until the $44 billion FEMA aid runs out; until the national Disaster Relief Fund, which normally funds emergency weather-related aid but will now also fund boosted unemployment, depletes to $25 billion; or until Congress passes new legislation regarding federal unemployment benefits — whichever occurs first.

Around 28 million Americans are currently collecting jobless benefits.

Weeks of heated negotiations among the Congress and White House officials over the next round of pandemic relief aid came to an abrupt halt in mid-August when the Senate adjourned for a recess until Labor Day.

"I don't think every single [member of Congress] understands the struggles people are really going through," Locarnini says of the recent legislative stalemate. "When I work, I can't go home until I get my job done, so it's frustrating to see them say, 'Well, it's our vacation time, so it's time to go home.'"

Smith echoes the feeling of frustration.

"It's so disheartening to see my senators spend millions on campaign ads on TV, just bashing each other but not doing a damn thing about anything," he says. "The fact that they walked away tells you everything you need to know about their priorities."

Check out: Americans spend over $5,000 a year on groceries—save hundreds at supermarkets with these cards

Don't miss:

More than half of states are now approved for the extra $300 per week in unemployment insurance

New $300 boosted unemployment payments could arrive by end of August, FEMA guidance says

‘We will lose everything:’ Americans express frustration at Congress adjourning without a stimulus deal

How a 31-year-old DACA recipient making $46,000 in Denver spends his money