House Democrats unveiled their latest stimulus recovery package this week, which proposes boosting federal unemployment benefits by $400 per week and extending emergency jobless programs through August 29.
The House Ways and Means Committee proposal differs from President Biden's $1.9 trillion American Rescue Plan unveiled in January, which aimed to boost federal unemployment aid to $400 per week and extend pandemic unemployment programs through the end of September.
Under current legislation passed in December 2020, enhanced benefits include an additional $300 per week on top of state aid through March 14, and federal programs phase out completely by April 11.
An earlier August cutoff date could negatively impact the most vulnerable workers by ending jobless aid before labor market recovery reaches them, writes Chad Stone, chief economist with the Center on Budget and Policy Priorities.
For example, the share of long-term joblessness is rising: 39.5% of people out of work report being unemployed for more than six months. The last week of January marked the 46th straight week where more than 1 million people filed for unemployment for the first time, either for state aid or Pandemic Unemployment Assistance, which supports freelancers, gig workers and those not traditionally eligible for benefits.
Ending federal aid sooner could disproportionately impact Black, Latino, women and low-wage workers who've lost jobs in industries hit hardest by the virus, including food service, travel and hospitality. Currently, the economy still hasn't recovered 10 million of the 22.5 million jobs lost since the pandemic hit the U.S.
The late-August cutoff would affect those on PUA and Pandemic Emergency Unemployment Compensation, which provides aid to the long-term unemployed who've exhausted their state benefits. Some 13.5 million people were collecting jobless benefits under one of these two programs in early February, among 20.4 million people total on unemployment insurance. When federal stimulus ends, anyone receiving benefits from PUA or PEUC will lose access to jobless aid; those on regular state aid or who move over to their state's Extended Benefits will lose access to the $400 weekly enhancement.
Additionally, Congress typically isn't in session in August, so if the policy measures expire at this time, it's more likely to cause a benefit lapse. Americans will remember that following the July 31 expiration of the previous $600 weekly supplement from the CARES Act, negotiations on a new round of relief between Congressmembers and Trump-era White House officials dragged on for months.
Conversely, "extending benefits an additional month better aligns their expiration with a time when Congress will be in session and focused on budget matters (with the fiscal year ending on September 30) and, thus, well positioned to further extend benefits," writes Stone.
Lawmakers, including Sen. Ron Wyden (D-Ore.) who will write the Senate version of the bill, have already expressed intentions to preserve the six months of extended unemployment benefits until the end of September.
Lawmakers appear to be set with pushing forward a $400 weekly boost, despite previous calls to reinstate CARES Act's original $600 weekly enhancement — a sum intended to help workers recover 100% of wages lost during the pandemic. Biden's campaign website said he would "work with Congress to extend the boosted unemployment benefits (the extra $600) for however long this crisis lasts."
House Democrats kicked off discussions on the latest proposal Wednesday and are expected to continue through Friday.
Without action, 11.4 million people are expected to start losing jobless aid on March 14, according to estimates from The Century Foundation. Policy analysts say Congress and Biden should ideally pass new legislation two to four weeks before the mid-March deadline in order to deliver aid with minimal delays.
In addition to extending federal unemployment aid, the latest Covid relief bill aims to finalize a new round of stimulus checks, expand the child tax credit, increase Affordable Care Act premium tax credits, provide Covid and health support for nursing homes, stabilize pensions and more.