Although unemployment fell to 10.2% in July from a high of 14.7% in April, the economy is still deep in a recession and it is clear that jobs did not open soon. As such, laid-off Americans need outside their standard benefits for unemployment.
At the end of March, the CARES law was signed into law, which allowed an incentive of $ 600 per week to unemployment that expired at the end of July. Lawmakers are now fighting over a second incentive package to provide overall relief from COVID-19, and unemployment is a major point that Democrats and Republicans cannot agree on.
Democratic lawmakers believe the recently passed $ 600 weekly incentive should be set up so that unemployed workers can completely replace their lost payroll. But Republican lawmakers are strongly opposed to maintaining that $ 600 incentive, and they feel strongly that doing so will prevent workers from returning to work. Instead, through September, they propose a $ 200-a-week boost to unemployment, after which benefits replace 70% of workers’ previous income.
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Meanwhile, President Trump has chosen to take matters into his own hands. Last weekend, he signed an executive order asking for a $ 400 weekly boost to unemployment while lawmakers continue a full relief package. But just how effective will the president’s measure be?
What will the president’s $ 400 boost do for unemployed Americans?
The average American out of work will typically be $ 708 a week under the new president’s order. Currently, the typical benefit to the state is spending $ 308 a week, which, clearly, is not much to live on. By adding $ 400 to that amount, unemployed workers will have an easier time keeping track of their debts, avoiding debt, and pumping money into an economy that desperately needs it.
But unemployed workers would also not have to rave to carry out the president’s order. For one thing, it’s unclear if it’s actually legal. Second, according to the executive order, workers who collect less than $ 100 a week in stateless unemployment benefits would not be eligible for additional federal assistance. Each state sets its own minimum weekly benefit in terms of unemployment, and for most that threshold is well below $ 100. In some cases, it is actually as low as $ 5.
Finally, the president called on states to cough up $ 100 of his $ 400 incentive, while the federal government provided the remaining $ 300. States that do not have that money in their budgets may not be able to oblige, which means some unemployed workers could potentially just collect an extra $ 300 a week.
There are still a number of questions that need to be answered before unemployed Americans see an extra $ 400 a week start popping up in their bank accounts. Meanwhile, lawmakers are still working on hammering out a full relief package, and if that happens quickly, the impetus back to land could happen sooner rather than later. Indeed, under the President’s proposal, it could take weeks, or even months, for states to implement a system to pay those extra benefits, so for the sake of those who are unemployed, let’s hope that it does not come to that.
