Back in early August, Congress couldn’t agree on the next stimulus bill before its month-long recess — Democrats wanted it beefy, providing a lot more funding to state and local governments as well as resuscitating the $600/week unemployment supplement that was keeping many Americans alive. But negotiations crumbled, and Congress adjourned until after Labor Day. President Trump then stepped in to sign an executive order decreeing a new weekly boost to meager state unemployment benefits, at a rate of $300/week — except that $300/week was coming from leftover funds in another federal program, not new funds authorized by Congress.
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That’s why just a month later, Trump’s Lost Wages Assistance program is already out of money in some states. Bloomberg reports that officials in Montana, Texas, and New Mexico were told on Wednesday that this past Saturday, September 5th, was the last week these states would receive the $300 federal assistance to unemployment benefits.
Meanwhile, in other states, the Lost Wages Assistance program is just getting its start. As of late August, only a handful of states had even been approved for the program — states had to voluntarily choose to participate, and then be approved for assistance. In fact, South Dakota’s Republican governor Kristi Noem went out of her way to decline the help, saying that the state didn’t need it despite its unemployment rate being 7.2% then. Before COVID-19, the national unemployment rate was around 3.6%.
States like California, Florida, and Pennsylvania that are just now starting to pay out these benefits, including backpay starting from the beginning of August, may see their portion of funds run out in a month too. Some states are also choosing to provide an extra $100/wk from their own pockets, but others may not be able to afford it since Congress hasn’t yet given states additional funding. A comprehensive list of when each state began or will start sending out Lost Wage Assistance benefits is here.
Since late March, when the first COVID-19-related unemployment claims were flooding in, state unemployment offices have been struggling to approve and process claims in a timely manner — in part because of the historic demand but also because they’ve been historically underfunded and still use decades-old technology. This logistical messiness is exactly why some lawmakers and state officials were against an unemployment boost that would cap benefits at a percentage of lost wages — the commonly proposed amount was 70%. That would leave it up to already-slammed state unemployment offices to calculate how much federal unemployment money to supplement in order to meet that 70% cap. The CARES Act’s $600/week benefit, in contrast, could be sent out comparatively quickly because it was a flat rate given to anyone who’d lost hours due to COVID-19 and applied for it; state unemployment offices didn’t have to touch it.
The Bureau of Labor Statistics also released the stats on last week’s unemployment numbers: there were 1.7 million new unemployment claims, of which 884,000 were through regular state unemployment and 839,000 were through the federal Pandemic Unemployment Assistance program that allows freelancers, among others, to be eligible for unemployment where they typically wouldn’t. The number of claims last week was higher than economists were predicting. Around 30 million people continued to be on unemployment benefits last week since filing their initial claims.
Now that Congress is back in session at last, Senate Republicans have pushed forward a truly anemic version of a stimulus package that’s slated to be voted on in the Senate this week. It includes a $300/week federal unemployment supplement until December 2020, provides some funding to small businesses but not to state governments, and ensures that businesses are protected from being sued by employees claiming their employers have been negligent about COVID-19. It does not contain a second $1,200 stimulus payment. It’s estimated to cost maybe $500 billion — leagues below the Democrats’ $3 trillion HEROES Act that the House passed back in May, or the compromise they offered during the last round of talks to cut the cost to $1 trillion.