The U.S. unemployment rate has been very dire since the COVID-19 pandemic first seized, plunging the economy deep into a recession. Last week there was some encouraging news on the unemployment front, when weekly unemployment claims came within 1 million for the first time since March. But this week, things took a turn for the worse.
The U.S. Department of Labor reported that for the week ending August 15, unemployment claims reached 1,106 million. It also revised its total number of claims from the previous week from 963,000 to 971,000.
Economists were initially hopeful when they saw new weekly unemployment claims submerged below the 1 million mark, but this week’s data gives us an undesirable check on reality – that we are still a long way from economic recovery, and that the need to boost unemployment is dire.
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Unemployed workers need help
Earlier this year, workers collecting unemployment were thanked for a $ 600-a-week benefit to them, thanks to the CARES Act. However, that $ 600 boost expired at the end of July.
Legislators have now been working on a second COVID-19 relief package to comply with CARES law, but so far they have reached an impasse, with rising unemployment the most notable sticking point. Democrats want to see a $ 600 weekly boost set by early 2021. Republicans feel an extra $ 600 a week is too high and will discourage unemployed workers from looking for new jobs. They proposed an incentive of $ 200 in September, after which unemployment benefits would replace 70% of the lost wages of the unemployed.
Meanwhile, President Trump is seeking to help the unemployed financially. Earlier this month, he signed an executive order demanding a $ 400 weekly incentive for unemployment. But in practice, that would actually amount to just $ 300 a week, because the president initially sought to fund individual states as part of that incentive, and many do not have the financial means to do so. .
Of course, a $ 300 incentive is better than nothing, but it can be short-lived. That incentive is only available in states approved for Federal Emergency Management Agency (FEMA) funding. A handful of states have already applied and received approval, but since funding is limited, states are only granted support for three weeks at first – meaning there is no guarantee that unemployed workers will receive that extra money if those three weeks are suspended. In any case, some unemployed workers may not be eligible for that $ 300 incentive because it is not currently available to those who collect less than $ 100 per week in unemployment benefits.
If lawmakers succeed in deciding on a second COVID-19 relief package, it could set the stage for a more steady stream of impulse unemployment for a longer time frame. But at the moment, they seem to be deadlock, which unfortunately only the public does.
