Here’s Why Your Unemployment Benefits Could Be Delayed For Months

TOPLINE

Senate Republicans unveiled a new coronavirus relief proposal this week that would replace the extra weekly $600 unemployment aid (which end this week) with a 70% wage-replacement program—but state labor departments are scrambling to figure out how their systems would handle the payments.

KEY FACTS

Surprising fact

Around 20% of U.S. workers received unemployment insurance benefits in June, which is five times greater than the highest unemployment insurance recipiency rate previously recorded, according to research from JPMorgan Chase. What’s more, households that receive benefits soon after job losses showed no relative decline in spending, the firm found, while households that had significant delays in receiving unemployment benefits (due to processing delays) have seen large spending declines. Compared to those who still have a job, spending falls by 20% before receiving unemployment aid, which suggests that “delays have imposed substantial hardship on benefit recipients.”

Chief critic

On Monday, New York Senator Chuck Schumer had harsh words after the plan was put forth on the Senate floor, ‘“The Republican proposal on unemployment benefits, simply put, is unworkable. It will delay benefits for weeks if not months as we slide into a greater degree of recession.”

Crucial quote

“The other issue that we have to focus on this week is the Washington aid package. The $600 unemployment check ends,” New York Gov. Andrew Cuomo told reporters over the weekend. “That is going to really cause havoc and tremendous distress for people. If the unemployment stops, Washington is playing politics, they have gridlock.”

Tangent

The divide over the supplemental unemployment benefit will not prevent traditional unemployment from being paid out. “Whether something happens now or doesn’t happen at all,” people in Texas, for example, can stay on regular unemployment insurance for well beyond the standard 26 weeks, the TWC spokesperson pointed out. Combined with additional unemployment benefits from the CARES Act and other state extended benefits, Texans can for instance still get up to 59 weeks of unemployment, with an average payout of around $350 per week (separate from the $600-per-week in federal unemployment aid established under the CARES Act). That said, a new study found that over 30% of Americans said they could not make it more than a month without the additional $600 payments.

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