Congress Should Continue to CAREOn the Expiration of the Federal Pandemic Unemployment Compensation
By Collin KanePublished July 21, 2020
The CARES Act provided supplemental unemployment insurance benefits of $600 a week to all workers who qualify for benefits. These benefits will expire at the end of July. Should this supplement be extended?
COVID-19 remains an imminent threat to the health of the American people and economy. The CARES Act supplement should be extended because of the demonstrated success of policy, the lingering effects of the pandemic on the workforce, and the continued strain on state and local budgets.
Congress’s infusion of trillions of dollars into the economy at the end of March to support businesses, frontline workers, and citizens of all ages was an integral step towards addressing the economic crisis precipitated by the novel coronavirus. As individuals lost their jobs, the Federal Pandemic Unemployment Compensation (FPUC) provided an additional $600 a week on top of other unemployment compensation for which workers are eligible. In June 2020, new research indicated money spent under the CARES Act was predicted to reduce poverty to pre-crisis levels. Early forecasts such as the above are a reminder of the necessity of supplements such as FPUC to mitigate the negative consequences of the COVID19 pandemic.
While programs under CARES are expected to help, the pandemic and its financial consequences will last far beyond July 2020. Under March legislation, FPUC was set to expire just barely four months after enactment. By comparison, the American Recovery and Reinvestment Act of 2009 provided a $25 boost in weekly benefits during the Great Recession from February 2009 all the way through December 2010. In the first week of July, 2.4 million workers applied for unemployment benefits. According to Heidi Shierholz, former Chief Economist at the US Department of Labor, that was the 17th week in a row unemployment insurance claims were more than twice the worst week of the Great Recession. According to a Fortune analysis of the U.S. Bureau of Economic Analysis income data, FPUC’s extra $600 weekly unemployment benefits boosted incomes by around $70 billion in May 2020. This loss of spending power post July combined with the continued symptoms of recession will have major ramifications for the economy and the individual.
Municipalities and states do not have the capacity to provide the needed support for residents in the latter half of 2020. The state of economic recession requires state and municipal governments to balance emergent needs at the local level while suffering the most financially. State tax revenues collapse, meanwhile costs continue to spring left and right. Congress can extend individual citizen support to fill these gaps with programs such as FPUC. The weekly benefit of FPUC combined with the expanded eligibility of programs such as Pandemic Unemployment Assistance (PUA) allow for a reduction in disparities across state lines, putting the country on a path to move forward together towards a healthy and recovered economy.
The Congressional Budget Office’s report from early June predicted that an extension of FPUC will lower employment while increasing the nation’s economic output in the second half of 2020. Furthermore, the report predicts both lower employment and lowered economic output for the calendar year 2021 under the original supplement provisions. While an extension of CARES’s FPUC at maximum value may not be fully desired, the program should be extended to aid citizens across states as they deal with continued pressures of the pandemic with the proven benefits of policy implementation. The pandemic and economic crisis are not over, and without being appropriately addressed, their consequences will continue to exacerbate existing inequities to create long lasting damage.