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Biden signs $1.9 trillion stimulus package—here's what it includes for unemployment

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The $1.9 trillion American Rescue Plan provides a $300 weekly boost, extends pandemic aid until Sept. 6 and offers a new tax waiver on the first $10,200 of unemployment benefits for many Americans. The stimulus bill passed through Congress Wednesday and was signed into law by President Joe Biden on Thursday.

The package will keep the current weekly enhancement on jobless aid at $300 until Labor Day. It also extends the CARES Act programs Pandemic Unemployment Assistance (for gig workers and those not traditionally eligible for aid) and Pandemic Emergency Unemployment Compensation (for the long-term unemployed) until early September. The maximum duration of PUA benefits increases to 79 weeks (up to 86 weeks in high-unemployment states), and for PEUC up to 53 weeks.

Mixed Earner Unemployment Compensation, which gives some workers with both W-2 and 1099 income an extra $100 per week in aid, will also extend to Sept. 6.

A new provision introduced by the Senate will waive taxes on the first $10,200 of unemployment benefits for individuals who made less than $150,000 in adjusted gross income in 2020.

Married couples who file jointly, earned less than $150,000 in combined adjusted gross income and both collected unemployment insurance benefits in 2020 will have taxes waived on up to $20,400 of UI benefits total.

Tradeoffs: $300 per week boost and $10,200 tax waiver

The package differs from Biden's original proposal in a few key ways: The original provided a $400 weekly UI boost and extended aid until the end of September. However, the value of federally enhanced UI, among other stimulus provisions, was changed in the last week to appease moderate Democrat Senator Joe Manchin of West Virginia, who threatened not to support the bill

At face value, "$300 instead of $400 is worse," says Heidi Shierholz, the director of policy at the Economic Policy Institute. A $300 weekly boost on top of state UI replaces 74% of the average worker's lost income, according to a CNBC analysis, while a $400 weekly supplement bumps it up to 85% wage recovery. The CARES Act's $600 weekly enhancement aimed to provide 100% wage replacement for the average worker.

But Americans may end up getting similar amounts of jobless aid with the addition of tax relief on UI benefits, Shierholz tells CNBC Make It, including the $600 weekly supplements through July and $300 weekly Lost Wages Assistance pay in late summer.

"Those largely offset each other," Shierholz says. "The tax relief is huge because you have all these families of unemployed workers who received benefits last year who are now scraping by, but may or not be in a job right now and are getting hit with massive tax bills."

With that said, some have noted the American Rescue Plan could cause a headache for taxpayers.

The relief bill offers $1,400 stimulus checks to individuals who earned less than $75,000 a year and phases out until $80,000. Workers who lost income between 2019 and 2020 and now fall under this threshold have an incentive to file their taxes soon in order to get a third stimulus check quickly. But if they also received unemployment benefits and file before the stimulus bill becomes law, they could miss out on claiming the $10,200 tax waiver right now; they'll likely have to file an amended tax return or take other steps later to reclaim funds.

Labor Day cutoff

The stimulus package now funds pandemic jobless aid until Sept. 6, but "that's just not enough," says Shierholz. "Even in the best case scenario for how things unfold over the next six months, we're still going to have elevated unemployment at that time."

More than 18 million people were receiving jobless benefits as of mid-February, including 11.8 million workers who, without programs created by the CARES Act, would be without any jobless support now, a year since the pandemic upended the U.S. economy. Additionally, 4.1 million people have been out of work for more than six months, according to the latest jobs report.

Economists have long supported tying federal stimulus to economic indicators, like the unemployment rate, rather than an arbitrary date picked by Congress.

One program, Extended Benefits, operates in a similar way. The federally funded program triggers "on" for select states during times of high unemployment. EB is currently available to residents in 15 states plus the District of Columbia, Puerto Rico and the Virgin Islands, according to the Center on Budget and Policy Priorities.

Nationwide, the unemployment rate stood at 6.2% in February, compared with a jobless rate of 3.5% the year prior. Notably, the unemployment rate doesn't capture people not looking for work, including an estimated 1.8 million men who left the labor force in the last year and 2.3 million women, especially moms forced out due to child care needs, no longer looking for work.

In all, there are still 9.5 million fewer workers in the job market today compared with a year ago, right before the pandemic-induced recession.

Shierholz says she hopes "automatic triggers will be taken very seriously as a priority" when Congress revisits stimulus again in late summer.

It may be too late to prevent a delay in benefits for some families

Biden renewed pandemic unemployment programs before they were scheduled to expire on March 14. But because it can take states several weeks to reprogram their UI systems, some families may see a delay in their continued aid this spring.

Those delays have happened before. President Trump waited until the day after the previous legislation expired in December to sign the previous stimulus bill, which caused an estimated 14 million people to temporarily lose benefits. One month after the law's enactment, nearly a quarter of states had not resumed paying out the $300 weekly benefit, according to calculations from The Century Foundation. An additional 12 states took three weeks or more to restart their PUA payments, and 15 states needed three weeks or more to reinstate PEUC. In total, The Century Foundation estimates the delays shortchanged jobless workers by about $17.6 billion in benefits for the first four weeks in January 2021.

With delays expected yet again, "it's mind boggling," Shierholz says. "We didn't put anything into place that would prevent this from happening. There's no other way to say it. We could put in automatic stabilizers so Congress wouldn't have to continually revisit these things. But we don't do that."

Even if workers experience a lapse in their payments, they'll still be entitled to their benefits from the time the bill is signed and can expect to receive their aid retroactively. That does little to help cash-strapped households stay on top of recurring bills and essential expenses, Shierholz says: "They just face extreme problems when benefits are allowed to expire."

Will the latest extensions of unemployment insurance impact your budget? We'd like to hear from you. Email work reporter Jennifer Liu at jennifer.liu@nbcuni.com.

Check out: Latest unemployment boost is 'too little, too late,' workers say: 'They forgot about us a long time ago'

Don't miss: Use this calculator to see exactly how much your third coronavirus stimulus check could be worth

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