The extension to unemployment insurance will give an extra $600 per week to every worker, which means low-wage workers might get a raise.
The coronavirus is bringing its share of problems. It has killed over 1,000 people and infected over 75,000 across the United States. Along with an increasing number of people catching the virus and getting sick or dying, the impacts on the economy are severe.
Many companies had to shut down to prevent the spread of the virus, causing many layoffs. Because of this, weekly unemployment claims spiked to an unprecedented 3.3 million. This is four times higher than the previous record set in 1982.
The Senate passed a $2.2 trillion stimulus bill on Wednesday that includes an extra $600 per week for four months for unemployed workers.
They will receive that amount on top of what they get from state benefits. Every worker will thus receive the same payment regardless of the salary they earn. That means some lower-wage American workers may actually get more than they earned before they lost their job.
This might seem unfair to some people, but it would be difficult to give different payments to everyone.
Why so? Government computer systems are ancient. More than half of the states rely on a technology dating back to 1959. The aging computers are unable to calculate different payments per worker.
A group of Senate Republicans revolted briefly against the uniform benefit earlier this week. They argued it could inadvertently drive unemployment. They said they will continue their efforts to change it, even after the bill passed the Senate Wednesday night.
The House of Representatives is supposed to vote on the measure on Friday.
The equal unemployment benefit will strain the state bureaucracies charged with setting it up. Things could be simpler if Congress gave money to states and let them decide what to do with it.
Right now I’m worried about states just processing all the claims they need to process, much less having to go in and reprogram their computers.
State unemployment systems are struggling to cope with the flood of workers applying for unemployment. Applicants have to be patient, as they have to deal with slow or downed websites, or wait a long time on the phone to speak with someone.
States will need to reprogram their computer systems to give the new benefit. Past increases in unemployment benefits have been difficult.
According to a review by the W. E. Upjohn Institute for Job Research, many states had to set up separate payments in the systems to handle a weekly increase of $25 in 2009, resulting in increased administrative costs.
Andrew Stettner of The Century Foundation thinks that if states have saved the computer code from this increase, they should be able to deploy it quicker to handle the $600 increase. He believes that the benefit boost will be very helpful for families. But Congress might have to extend the boost for more than four months if the crisis lasts longer, which is an increasing possibility.
What is sure is that lower-paid workers will be happy to get a short-term raise during these hard times.
Last modified: September 23, 2020 1:46 PM