I’m going to take a deeper dive into what Republicans are calling their “improvements to the accuracy of the payments.”
End of $600 Weekly Unemployment Benefit
OK, so big picture, CARES Act enacted in March said those on unemployment would get an extra $600 per week, federally-funded, on top of state unemployment benefits, that $600 is now done, it’s the end of July, the $600 is done.
The reason why Republicans were OK with this quite generous extra $600 a week was because they knew that state unemployment technology and programming couldn’t do anything more granular.
From the beginning, Republicans would have preferred to tie the amount of the weekly federally-funded benefit to the laid off individual’s prior wage rather than a blanket $600 weekly to everybody.
However, it was clear at that time that states with their archaic technology and programming couldn’t accomplish that, so Republicans were OK with signing off on just the $600 a week for everybody on unemployment in the CARES Act.
Now, Republicans appear to be more confident that by October, and October 5, specifically, which is the first Monday in October, states will have updated their technology and their programming to accommodate targeting the federally-funded enhanced unemployment benefits to the individual’s prior wages.
Republican’s Scheme for the Weekly Payment
So here’s the Republican’s scheme: after July the $600 weekly payment would be replaced by a $200 weekly payment that would persist for those on unemployment throughout July, August, and September and ending on October 4.
I have a feeling that this would probably be retroactive, because this bill not just gonna be passed tomorrow. There’s going to be a week or two, hopefully not much more than that of back and forth between Democrats and Republicans.
I’m hoping that it will be retroactive. There’s nothing in the bill that would say it can’t be retroactive. So I’m thinking that that would be retroactive if this is this kind of thing that passes.
Beginning October 5 and lasting through December 31, the end of 2020, Republicans are proposing that this flat rate payment would be replaced by a payment that, when combined with the state unemployment payment, would replace 70% of the individual’s prior wages, either via a formula specified in the bill or by a state proposing an alternative method and receive approval from the feds.
The maximum federally-funded unemployment piece would be $500 a week in October, OK, so here in California our maximum state unemployment, normal unemployment is $450 a week. So at around the $70,500 wages mark, that’s when your benefit would max out, track with me as I do the math.
$70,500 divided by 52 is $1,355 weekly, that’s your average weekly wage.
70% of $1,355 is $949, let’s say $950.
$950 less the California maximum state-funded unemployment of $450, and you’ve maxed out for California if you’re at this income level, so $950 plus $450 gets you to your $500.
Keep in mind that the example I just used is not meant to accurately describe how states calculate average weekly wages across the board, states have different formulas for doing that, some used high quarter wages or wages across some but not all quarters in a base period, but it’s just a rough example there.
If as October gets closer, a state looks at its technology system and says, heck no, no way we could possibly pull this off, targeting the combined state unemployment payment with the federal unemployment payment to be combined equal to 70% of the individual’s prior wage, the state could apply for a waiver from the Department of Labor to continue paying a fixed dollar amount for up to two months. The deadline for a state to do this is October 5, so some states would still pay a fixed dollar amount throughout October and November.
Also, Republicans are proposing that through September the enhanced weekly unemployment benefit would not count as income when determining eligibility for federal low-income programs in the same way that wages and regular state unemployment payments do now. However, beginning in October, Republicans are proposing that the weekly federal enhanced unemployment benefit would count as income when determining eligibility for these programs.
Now, I just want to remind you that is simply the Republican proposal, we know that many Republicans themselves are not happy with it, and not only that but also a bill will have to be approved by not only the Republican-held Senate but also the Democrat-controlled House before it goes to President Trump for signature, so Democrats will surely do their darndest to negotiate up the Republicans on this unemployment provision, remember, the Democrats in the HEROES Act that passed the House, they wanted the full $600 weekly to be extended through early 2021, now on that point, House Majority Leader Steny Hoyer was on CNN this morning talking about the Republican proposal, he was critical of it, calling it inadequate, but nevertheless, he left some room for negotiation:
John Berman: I just want to make sure I’m hearing you correctly, it does seem like you might be willing to come off some from $600, not to $200. But you’re not demanding $600 or bust.
Steny Hoyer: Look, it’s not $600 or bust. … (House Speaker Nancy) Pelosi said the other day, which I thought was a great line: ‘We don’t have red lines, we have values.’ We’re going into these negotiations with values.
To say that $600 or nothing, no, that’s not where we are. We’re prepared to discuss this. But we’re also not prepared, however, to let down the American people, to let down the states, the cities, the local governments who hire people, who are meeting this pandemic’s crisis, including health personnel.
We’re not willing to walk away from the American people, which we think is what this bill does. And in my opinion, this bill is a McConnell fig leaf. It is a pretense of response rather than a substantive response. They would have acted much more quickly if they really wanted to deal with this problem, but two and a half months went by, nothing happened.
So #2 Democrat in the House saying, nope, it’s not $600 or bust, we don’t like what the Republicans have put together, what was that phrase he used, a McConnell fig leaf, that’s amazing, that’s a great phrase.