The CARES Act’s federal unemployment benefit ended on Friday with nothing in place to keep it going. Senate Majority Leader Mitch McConnell‘s HEALS Act proposal does include a version of the benefit, although it is substantially reduced from the CARES Act’s weekly $600 benefit. It also has a more complicated system to supplement state unemployment benefits that could kick in once states could put the system into effect.
In the lead-up to McConnell’s introduction of the HEALS (Health, Economic Assistance, Liability Protection, and Schools) Act, the future of the federal unemployment benefit was a hot topic in Washington, as Republicans suggested it did not need to be as much as $600 a week. They argued it disincentivized Americans from looking for work. House Democrats voted to extend the benefit into January in the HEROES Act, which passed in May and McConnell refused to take up.
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The version of the HEALS Act McConnell unveiled included cutting the federal unemployment benefit down to just $200 per week through September. This assumes that states only need just over two months to prepare a new system, where Americans would receive aid set at 70% of the worker’s former salary, notes Fox News. This new system would begin in October, and no check would be more than $500, according to a Senate Finance Committee memo. If a state does not get acclimated to the system by then, they could apply for a waiver to continue sending out the $200 per week benefits for at least two more months. In addition, the payments will count as income when determining if a worker is eligible for low-income housing, beginning in October.
Beneficiaries would receive federal unemployment in addition to state benefits, and the two combined should replace 70% of the worker’s former salary, according to CNBC. However, the issue with this is that every state uses different formulas to calculate unemployment benefits and they have different minimum and maximum payments. For example, in New York, the maximum unemployment benefit is $504. This means if a recipient used to earn $104,000 per year, they could only receive up to $504, which is only 25% of their former wage. Therefore, this person would have to get $896 in federal aid to get 70% of their salary, but the proposal says no payment can exceed $500.
Now that the CARES Act’s $600 weekly benefit is over, the average unemployment check will drop to $330 per week, based on the 2019 average according to a California Legislative Analyst’s Office analysis. More than 30 million Americans are now receiving unemployment benefits during the coronavirus pandemic, the Labor Department said. The number of new jobless claims has been more than 1 million for the past 19 weeks.
