Millions of Americans remain unemployed in the wake of COVID-19. At the end of March, the CARES Act came into force and was allowed for an incentive of $ 600 per week in unemployment benefits until the end of July. But now that that extra money is gone, many people are left struggling to keep up with their basic expenses.
Lawmakers have passed it on a second COVID-19 relief package, and one aspect they cannot agree on is unemployment. When it became clear that a second deal would not be signed into law, President Trump signed an executive order requesting a $ 400 weekly incentive for unemployment. This impulse will in practice amount to only $ 300 in most states, because only $ 300 of it comes from the federal government, and most states have no room in their budgets to cover the remaining $ 100.
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Of course, an extra $ 300 a week is better than nothing. But unfortunately, it can take weeks, if not longer, before that extra money actually starts to land in the pockets of Americans.
When can the unemployed expect their unemployment boost?
The $ 300 incentive for President Trump will come in the form of a FEMA grant, and states will have to apply for it to raise residents’ money. But states simply cannot apply these benefits to their current unemployment benefits. After all, they have to reconfigure their systems to spread that money, and that process can take weeks, if not longer, especially considering that many unemployment systems run on archaic software. That’s bad news for anyone who’s already struggling financially.
Now for the good news. Once states are established, unemployed residents will be eligible for their $ 300 weekly incentive retroactively through August 1st. As such, delays in getting that money will not cause unemployed people to lose it; they just have to wait longer to get it. But that scenario alone could bring millions of expensive debt.
In addition, not every unemployed employee is eligible for that $ 300 per week incentive. Specifically, those who currently receive less than $ 100 per week in state unemployment benefits will not be entitled to that extra money. (If that sounds counterintuitive, you are not alone. You would think that those who receive the least amount of unemployment will need that extra $ 300 the most.) More than three dozen states have a minimum weekly unemployment benefit that $ 100 falls, so many workers risk losing out on this new financing.
Another problem with the president’s proposal is that the increased unemployment benefits it demands can finally live very short lives. States will initially guarantee FEMA funding for three weeks, but beyond that there is no guarantee of getting more – especially since they will withdraw money from the same pool that is used to respond to natural disasters, such as hurricanes.
All told, unemployed Americans are currently in a very precarious place, and the longer it takes to get their extra money, the more our entire economy suffers. At present, our economy is stuck in a recession, and without adequate income, the unemployed are inclined to cut spending in a very significant way. Getting more money in hand is essential to thank us for our full recovery, but there does not seem to be a good solution for speeding things up.
