$400 Unemployment Stimulus Is Really $300, and Won’t Arrive Soon
$400 Unemployment Stimulus Is Really $300, and Won’t Arrive Soon
The federal aid to unemployed workers that President Trump announced last weekend looks likely to be smaller than initially suggested — and it remains unclear when the money will start flowing, how long it will last or how many workers will benefit.
The uncertainty comes at a delicate time for the economy. New applications for state unemployment benefits fell below one million last week for the first time since the pandemic took hold in March, the Labor Department said Thursday. But filings remain high by historical standards, and other measures show the economy losing momentum.
A $600-a-week federal supplement to unemployment benefits, enacted to address the pandemic, stopped at the end of July. That has pulled away a key source of support, not just for the nearly 30 million Americans receiving benefits but also for the broader economy.
“The status of the financial relief is a huge question mark hanging over the economy,” said Daniel Zhao, senior economist for the career site Glassdoor.
Mr. Trump said Saturday that he was taking executive action to provide unemployed workers with $400 a week in extra payments, on top of their regular state jobless benefits. He did so after talks on a new round of pandemic relief stalled in Congress.
The Senate adjourned on Thursday until early September, and House members had already left Washington. The departures all but end any chance of a quick agreement on sending stimulus checks to American taxpayers, reviving lapsed unemployment benefits and providing billions of dollars for schools, testing, child care, small businesses, and state and local governments.
In the meantime, states are scrambling to figure out how to carry out Mr. Trump’s plan, with unemployed workers wondering whether the money will arrive in time to prevent lasting financial harm.
Here is what we know about the program and how it will work.
The benefit will be $300 for most workers, not $400.
When Mr. Trump announced the program, known as Lost Wages Assistance, he said it would add $400 to workers’ weekly unemployment checks.
But unlike the earlier supplement, which was fully funded by the federal government, the program called for states to chip in a quarter of the cost. Governors from both major parties balked at being asked to spend billions of dollars when tax revenues have plunged because of the economic collapse.
So this week the administration offered new guidance: Rather than adding $100 a week on top of existing unemployment benefits, states could count existing benefits toward their share. In other words, unemployed workers would get an extra $300, not $400.
States still have the option of providing an extra $100, but few if any are expected to do so.
“They’re stretched,” said Andrew Stettner, a senior fellow at the Century Foundation who has been studying the unemployment system. “They don’t have money for masks for the teachers in their schools. They’re probably not going to come up with an extra $100 for everyone on unemployment insurance.”
The lowest-paid workers won’t qualify for the extra money.
Under guidance released by the Labor Department on Wednesday evening, the new program will be available to people who certify that they are “unemployed or partially unemployed due to disruptions caused by Covid-19” — but only if they already qualify for at least $100 a week in unemployment benefits.
That provision would exclude roughly one million people, nearly three-quarters of them women, according to Eliza Forsythe, an economist at the University of Illinois.
“They’re the people who need it the most,” Ms. Forsythe said. “They were low paid to begin with, and then being singled out for not getting this benefit I think is really cruel.”
It isn’t clear why the $100 minimum was established. Mr. Trump established the benefit under a federal disaster program that requires states to cover 25 percent of any costs. But that rule applies to the overall program, not to individual recipients. People receiving money under the Pandemic Unemployment Assistance program, for example, qualify for the $300 a week even though that program is entirely funded by the federal government.
It could take weeks for the money to start flowing.
Even for those who qualify, it could be weeks or even months before they begin receiving any extra money. States will need to adjust to the new provisions when they are already overwhelmed by unemployment filings.
It took months for some states to begin paying benefits under the Pandemic Unemployment Assistance program — which extended benefits to cover independent contractors, self-employed workers and others left out of the standard unemployment insurance system — in part because of archaic computer systems that are difficult to reprogram.
“We think it would take months,” William G. Kunstman, a spokesman for the Hawaii Department of Labor and Industrial Relations, said in an email. He cited the difficulty of reprogramming the state’s computer system to comply with federal requirements.
Even states with more modern computer systems said it could take weeks to get the new supplement started. Bill McCamley, secretary of the New Mexico Department of Workforce Solutions, said that his state was among the first to get the pandemic assistance program up and running, but that it still took nearly a month.
“Even in our system, which is very modern in the unemployment world, it’s still going to take us time to do it right,” he said.
Mr. McCamley also warned that a murky timeline could prompt further confusion and distress for people seeking the new benefit. After Mr. Trump signed the $2.2 trillion stimulus into law on a Friday in March, Mr. McCamley said, his office returned Monday to thousands of calls seeking the aid — even though it would take about a month to streamline the new benefits and programs.
“The message went out that this was done, and there was not a concurrent one saying this doesn’t happen at the flip of a light switch,” he said.
Trump administration officials contend that the new program will be faster to put in place because states have gained experience during the pandemic. But even these officials say it will probably be weeks before workers start receiving the money.
The money won’t last long.
The program is retroactive to Aug. 1, meaning that workers should eventually receive payments for all of August.
But Mr. Trump’s executive action caps spending on the program at $44 billion, enough to cover five or six weeks of benefits, assuming all states sign up. That means the program could end almost as soon as it begins.
It is still possible that Congress could either revive the original unemployment supplement — though probably at less than $600 a week — or appropriate more money for Mr. Trump’s replacement.
But any deal appears far off. Democrats in the House voted in May to extend the $600-a-week enhancement through the end of the year as part of a $3.4 trillion stimulus measure, but Senate Republicans have refused to take up that bill. The $1 trillion proposal unveiled by Republicans last month calls for a supplement averaging $200.
Democrats argue that a legislative solution is the only way to provide workers with certainty.
“The Labor Department’s new guidance leaves many unanswered questions,” said Senator Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, who helped negotiate the original $600 benefit. “Workers struggling to pay rent and buy groceries are not going to see benefits they were promised any time soon.”
Workers are left in limbo.
For unemployed workers, the uncertainty over benefits means not knowing when they will be able to pay down the credit cards, or whether they will be able to make rent on Sept. 1. For those already struggling to get help from overwhelmed state unemployment offices, the prospect of further delays is even more frustrating.
David Moniz started a job in March as a resident chef at Sur La Table, the kitchen goods retailer, in San Jose, Calif. His timing was terrible: After he spent one day on the job, the store shut down because of the virus, and he was furloughed.
It took Mr. Moniz, 29, weeks of calling to get through to California’s employment office and file an unemployment claim. Then, after a few weeks, his benefits abruptly stopped. His file is shown as “pending” on the state website, and despite endless hours of calling, he has been unable to get through to address the problem. He hasn’t received a check since June 1.
Without any money coming in, Mr. Moniz has burned through his savings and racked up debt. He has $28 left before he hits his credit limit, he said, and owes $200 in late fees and penalties to his bank, Wells Fargo.
“Wells Fargo calls me more than anyone in my family does because of my account right now,” he said.