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Bill would improve Unemployment Insurance CARES Act provisions and continue to offer out-of-work Americans $600-per-week lifeline through the end of the year
With individuals and states facing dire unemployment challenges and in need of an economic lifeline in the midst of the novel coronavirus (COVID-19) public health crisis, U.S. Senator Jack Reed (D-RI) is offering new legislation to expand and enhance pandemic unemployment insurance. Reed’s bill would improve Unemployment Insurance (UI) provisions in the CARES Act and continue to offer out of work Americans a $600-per-week economic booster shot beyond July 31, through the end of the year.
Senator Reed’s approach resoundingly rejects the misguided attempts by some Republican lawmakers to scapegoat out-of-work Americans by claiming benefits for low-wage earners are too generous. Senator Reed says the UI benefits should expire based on conditions on the ground — and be guided by America’s public health and economic needs — not on an arbitrary or political timetable.
Noting that over 30 million Americans have been forced to join the official jobless ranks over the last two months, Reed’s new legislation, the Strengthening UI for Coronavirus Impacted Workers and Students Act, would extend federal Pandemic Unemployment Compensation (FPUC) for those who have exhausted their benefits and includes other key enhancements.
Reed says that in the midst of a pandemic, Congress and the Trump Administration can and should do more to help improve public health, bolster economic stability, and help safely and effectively reopen our economy.
“The economic pain and uncertainty people are feeling is real. Bills are piling up and coronavirus has taken people’s steady paychecks. Refusing to extend unemployment insurance in the midst of an ongoing pandemic could make a desperate situation worse for individuals and harm the economy. Being jobless in these uncertain times and relying on unemployment is stressful enough. If Congress arbitrarily cuts them off and tries to prematurely push them into unsafe work environments, it will cost families, businesses, and communities alike,” said Senator Reed, noting that the CARES Act, which was unanimously approved by Congress included $250 billion for unemployment assistance, including the $600 increase in FPUC, and extended unemployment insurance (UI) by 13 weeks. It also expanded coverage to individuals previously ineligible for traditional unemployment benefits, such as the self-employed or gig economy workers.
The law clearly states that the benefits are only available for those who are eligible and that if an employer reopens and calls workers back to work and they refuse, then they can lose their UI eligibility. Anyone found to be in violation of the rules may be forced to pay back all of the illicitly gained money, as well as a 30 percent penalty, and have limitations imposed on their ability to file for future unemployment assistance. Reed also noted that UI is a direct form of economic stimulus for states because the cash distressed job seekers receive gets quickly spent and plowed right back into the economy, benefitting businesses, workers, and local governments.
Under the federal-state unemployment insurance (UI) system, benefits vary widely by state and are calculated based off a worker’s previous four quarters of wages. According to the Center on Budget and Policy Priorities state UI programs paid an average of $387 weekly to unemployed workers as of February 2020. But that was when job seekers were able to actively look for work. The study also showed benefits ranged by state, from a low of $215 in Mississippi to $550 in Massachusetts.
The Strengthening UI for Coronavirus Impacted Workers and Students Act, would expand upon the CARES Act and make needed fixes to enhance the law by:
• Extending the FPUC through December 31, 2020;
• Making the FPUC retroactively available as far back as thecoronavirus pandemic disaster declaration date;
• Codifying into law current U.S. Department of Labor (DOL) guidance to provide a full $600 per week federal payout to individuals whose employers have enrolled in work sharing UI programs.
• Exempting UI benefits from income for all means-tested programs, such as federal Section 8 housing and nutrition assistance programs like SNAP;
• Creating a $300 federal benefit for recent college graduates and students.
• Extending 100% federal financing of UI Extended Benefits.
“In this midst of a pandemic and unprecedented economic upheaval, this legislation would help extend unemployment insurance and maintain economic stability for individuals, families, and communities,” said Reed. “Nobody is living it up on $600 per week, but that sum could make a life-saving difference for thousands of Americans. It is appalling that some lawmakers want to try to financially pressure Americans into choosing between their health and destitution. COVID-19 doesn’t care about the calendar or political time tables. We have to be smart and this targeted, temporary measure will help ensure Americans who are out of work through no fault of their own can afford food, housing, and medicine until it is safe to go back to work.”
The bill also seeks to codify DOL guidance regarding “work sharing” subsidies for employees of businesses enrolled in state-run layoff prevention programs. In an effort to help employers avoid terminating or furloughing skilled-workers and incur the costs of rehiring, and to help workers keep their jobs and benefits, Senator Reed added a $100 million work sharing provision to the CARES Act.
Rhode Island is one of 27 states and the District of Columbia that currently offer work sharing programs, also referred to as short-time compensation (STC). Work sharing is a voluntary program that preserves jobs by giving employers an alternative to layoffs during times of decreased demand. It provides struggling companies the flexibility to reduce hours instead of their workforce and helps employers save money on rehiring costs, while employees who participate in work sharing keep their jobs and receive a portion of unemployment insurance benefits to make up for lost wages. This provision is modeled after Reed’s Layoff Prevention Act, which Congress previously enacted from 2012 to 2015, saving over 130,000 jobs at the time. Administered at the state level and reimbursed by the federal government, nearly 30 states have already used some form of work sharing program to help businesses and workers in their communities. The bill includes 100 percent federal funding of work sharing programs for states with programs already in place, and 50 percent federal funding of work sharing programs for states that work with the U.S. Department of Labor to develop a new work sharing plan.
Rhode Island’s WorkShare program is available to any employer with two or more employees. Interested employers may apply for WorkShare by visiting DLT’s WorkShare website or calling their employer phone line at (401) 462-8418.
“Work sharing is a critical tool in an economic downturn that allows companies to reduce work hours for their staff but keep them on full payroll and maintain their health and retirement benefits. So, workers win, and companies save on re-hiring costs. It is a proven job saver in both red states and blue states and this $100 million will benefit Rhode Island and other states with existing work sharing programs, and help those that are looking to enact a program qualify for federal support,” said Senator Reed, who noted that work sharing programs have helped 40,000 people nationwide during the pandemic, according to the most recent data from the Labor Department.
The lead author of the bill in the U.S. House of Representatives is Congressman Dan Kildee (D-MI), a Member of the Ways and Means Committee. Language from the bill is included in the $3 trillion Heroes Act.
“As we address the impacts of the coronavirus on our economy, it is important to ensure we have a strong unemployment system to protect workers and their families,” Congressman Kildee said. “The expanded unemployment benefits, as a part of the CARES Act, was a first good step. But we must expand upon this legislation to make sure that workers and families are not falling through the cracks. I know this is an incredibly difficult time for Michiganders, and I am dedicated to ensuring the federal government provides them the support they need to take care of their families.”
Senator Reed’s bill is supported by the NAACP, AFL-CIO, Center for Disability Rights, International Brotherhood of Teamsters, National Employment Law Project (NELP), National Low-Income Housing Coalition (NLIHC), and many other organizations.
SUMMARY: The Strengthening UI for Coronavirus Impacted Workers and Students Act
• Extends $600 Federal Benefits through December 31, 2020 with a “Soft Cutoff”
Under the CARES Act, the $600 per week federal benefit is available through July 31, 2020. This means that depending on when an individual applies for UI, they may not be able to collect their benefits for the full length of time they are eligible. In some states, that is up to 39 weeks (26 weeks of state eligibility plus the federal 13-week extension). This bill would allow the $600 federal benefit to run through December 31, 2020, with a “soft cutoff,” so that people who were getting benefits as of December 31 could finish receiving their full benefits, as long as those benefits end by June 30, 2021.
• Makes $600 Federal Benefit Available as Far Back as Disaster Declaration Date
The $600 per week federal benefit established through the CARES Act is available to individuals beginning on the date their state entered into an agreement with the U.S. Department of Labor (DOL) to enroll in the federal program. This bill would make the $600 per week benefit accessible to those who lost their job as far back as the date the President declared a national emergency, March 13, 2020.
• Codifies Providing $600 Federal Benefit to Workers Whose Employees Have Enrolled Them in Work Sharing Layoff Prevention Programs
Short-Time Compensation or “work-sharing” programs allow employers to voluntarily make an agreement with the state unemployment office to prevent layoffs by reducing employee hours and continuing to pay a portion of their salary and maintain their health benefits and other benefits. Workers with reduced hours whose employers establish work-sharing programs are eligible for partial state UI benefits. This bill would codify into law the current DOL guidance to provide a full $600 per week federal payout to individuals whose employers enrolled in work sharing UI programs. While this allows some workers to come out ahead, it has a societal benefit of reducing unemployment and keeping family’s health and other benefits intact.
• Exempts UI Benefits from Income for All Means-Tested Programs
Under the CARES Act, UI benefits are not counted as income to determine eligibility for Medicaid or the Children’s Health Insurance Program (CHIP). However, these UI benefits could impact an individual’s eligibility for other means-tested programs such as federally assisted housing benefits (Section 8), Supplemental Nutrition Assistance Program (SNAP), Temporary Assistance for Needy Families (TANF), and Women, Infants, and Children (WIC). This bill would exempt Federal Pandemic Unemployment Compensation benefits from affecting eligibility for all means-tested programs.
• Creates $300 Federal Benefit for Recent Graduates and Students
Creates a $300 per week federal benefit to individuals willing and able to work absent COVID-19, but who do not have recent attachment to the labor force. This will encompass students and recent graduates without the necessary work experience to demonstrate recent attachment to the labor force who cannot find employment due to the COVID-19 pandemic.
• Extends 100% Federal Financing of UI Extended Benefits
Extended Benefits (EB) are available to workers who exhaust regular unemployment insurance during periods of high unemployment. This is a benefit in permanent law that is triggered when a state exceeds a particular unemployment rate or measure of the number of UI recipients. Normally, EB is administered through a 50/50 cost share between the state and federal governments. The Families First Coronavirus Act provided full federal financing through December 31, 2020. This bill extends the full federal financing of EB through June 30, 2021, to relieve the financial burden on states due to coronavirus.