Unemployment benefits may pay just $5 a week without stimulus deal

Unemployment benefits may pay just $5 a week without stimulus deal

It appears unemployed workers won’t get another boost in their weekly benefits anytime soon, after President Donald Trump pulled officials out of negotiations on a fifth round of coronavirus relief Tuesday.

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The move abruptly dashed hopes of a deal on items such as enhanced unemployment benefits after weeks of talks between the White House and top congressional Democrats seemed to be bearing some fruit.

Absent more aid, jobless Americans will be living off their current allotment of benefits from the state or federal government. In some cases, that amounts to just $5 a week.

Even that money will disappear by the end of the year for millions of workers without more legislation — leaving them with no income if they’re unable to find another job.

“It appears we’re not getting another fiscal package over the next few months at least,” said Ernie Tedeschi, a policy economist at Evercore ISI.

$5 a week

More than 26 million Americans are collecting unemployment benefits, according to the Labor Department. Nearly seven months into the economic crisis caused by the coronavirus pandemic, more than 1 million are filing new applications for benefits each week.

On average, states paid $305 a week (about $1,220 a month, before tax) in unemployment insurance to workers in August, according to Labor Department data.

Some paid much less. Louisiana and Mississippi, for example, paid just over $180 a week ($720 a month) — the lowest average among the states.

However, some workers get less still. States pay unemployment benefits within a range, between a minimum and maximum weekly amount. Those ranges vary significantly by state.

In Hawaii, for example, that minimum is $5 a week. Just nine — Arizona, Kansas, Michigan, Montana, New Jersey, New York, Ohio, Oregon and Washington state — pay a minimum over $100 a week.

The U.S. average of states’ weekly minimum benefits is $61 a week (approximately $244 a month).

‘Hard to live’

Unemployment benefits replaced about 39% of lost wages for the average American in the second quarter this year, according to Labor Department data.

“It’s pretty hard to live on that for a long period of time,” said Eliza Forsythe, an assistant professor and labor economist at the University of Illinois.

A $600-a-week federal supplement provided by the CARES Act, a $2.2 trillion relief law enacted in March, more than replaced prior wages for many workers. But that supplement ended at the end of July.

A subsequent Trump administration measure, the Lost Wages Assistance program, gave workers a $300 federal boost for up to six weeks. Many states have already issued that money, and hundreds of thousands weren’t eligible for any funds.

The expiration of these measures likely means a severe cut in household income for millions of people, according to economists. Meanwhile, there are two unemployed workers for every job opening, according to the Bureau of Labor Statistics, and child-care responsibilities and health risks may prevent some from going back to work.  

“Very few people can stay in their same housing with all their same debts and obligations if they’re only earning 35% to 40% of what they were earning before,” Forsythe said.

Source: CNBC

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