As coronavirus cases continue to surge across the country, forcing many Americans out of work, enhanced unemployment benefits enacted under the CARES Act would be cut in half in a new plan proposed by Senate Republicans on Monday. The Health, Economic Assistance, Liability Protection and Schools Act, otherwise known as the HEALS Act, confirmed what had long been speculated: Republicans would seek to drastically reduce or entirely cut the $600 weekly benefit, which has been considered a lifeline for tens of millions of Americans left unemployed.
As the benefit nears its expiration date of July 31, the HEALS Act seeks to slash the total weekly amount from $600 to just $200, or from $2,400 per month to $800. According to a CNBC analysis of Labor Department data for May, this would give the average worker about $521 a week in federal and state unemployment benefits, which amounts to a 43% cut in total benefits when compared with the prior, $600-a-week federal policy. This new amount would last through September, at which point, beginning in October, the HEALS Act would mandate a new formula capping unemployment benefits at 70 percent of a person’s wages before they had lost their job.
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Although only introduced on Monday, this new plan is already facing pushback, and not only from Republicans. According to a number of experts and economists, the Republicans’ unemployment proposal could actually worsen the economy, which is still struggling to make a comeback.
Speaking to Vox, Heidi Shierholz, senior economist and policy director at the Economic Policy Institute, noted that many of the jobs lost amid the pandemic will not be coming back anytime soon, and some may not come back at all. Shierholz said that “we are just furloughing people until we can reopen.” Michele Evermore, senior policy analyst at the National Employment Law Project, expressed a similar viewpoint, telling CNBC that she doesn’t “know what’s different from the pandemic now than in March, except that it’s worse.”
According to a recent study from JPMorgan Chase, cutting the additional unemployment protections could lead to a 29 percent decline in the rate of unemployed spending, Forbes reports. Adding even more concern is the fear that antiquated systems will be unable to process the sudden changes in benefit formulas, a concern that was expressed by UC Berkeley economics professor Jesse Rothstein. Speaking to Vox, Rothstein said that “there will be states that can’t adjust in time and are unable to make pandemic unemployment payments for a couple of weeks while they reprogram their systems.”
The reduced unemployment benefit is expected to be a sticking point among both Republicans and Democrats and something that will undoubtedly face fierce negotiations. Currently, the benefit is set to expire on Friday, and with no short-term extension currently in place and little hope that the HEALS Act will pass by that time, it is unlikely that it will be extended for some time.
