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COVID Relief Package Includes Important Unemployment Benefit Extensions, But Duration Should Be Extended

The House Ways and Means Committee will consider legislation this week to extend critical unemployment benefit provisions that help unemployed people pay their bills and care for their families.

The economic relief package of December reinstated a federal benefit increase (though at a lower level than in place earlier in 2020), provided additional weeks of benefits so jobless workers would not lose benefits while the nation was still struggling with COVID-19 and its economic fallout, and continued the Pandemic Unemployment Assistance (PUA) program, which expands benefit eligibility to a broader group of jobless workers. These provisions are currently slated to expire in mid-March, and the House Ways and Means bill would extend them through August (with an increase in the federal benefit supplement, which would go from $300 per week to $400). This extension is critical, but, as discussed more below, it would be preferable for these benefits to remain in place through the end of September or until economic conditions warrant, as President Biden proposed.

The jobs report for January showed scant job creation and a still-large jobs deficit compared with February of 2020. The jobs recovery has a long way to go and, without an extension of these critical provisions that are currently slated to expire in mid-March, millions will lose the jobless benefits that are keeping them afloat while jobs are scarce and COVID-19 makes it dangerous to go back to work.

The unemployment provisions before Ways and Means would ensure that current jobless benefit recipients who do not find a job could continue to receive benefits, including a $400 per week federal supplement on top of their state-determined benefit amount, through the last week in August. The legislation also extends full federal funding of Extended Benefits if high unemployment in a state triggers the program.

In the week ending January 30, over a million people filed an initial claim for unemployment assistance through the regular state unemployment insurance program or PUA. That last full week of January was the 46th straight week in which initial claims in these programs topped a million. For the week ending January 16, three-fifths of the 17.8 million continued claims for all unemployment benefit programs were for PUA or Pandemic Emergency Unemployment Compensation (PEUC) — the CARES Act program that provides additional weeks of benefits to people exhausting regular state UI benefits. If policymakers do not extend these programs, they will be closed to new enrollees after March 14 and no PUA or PEUC benefits will be paid to anyone after April 5.

A disproportionate number of job losses since last February are in industries that pay low wages and, since last spring’s steep job losses, workers of color and those without a bachelor’s degree have experienced a far slower jobs recovery than white workers and college graduates. The lowest-paying industries accounted for 31 percent of all jobs in February of 2020, but 57 percent of the jobs lost since then, CBPP analysis finds. Many of these jobs are in leisure and hospitality and other industries that will not revive quickly until COVID-19 is under control. Unemployment assistance will be vital to relieving hardship for the workers who have lost jobs in these industries.

The CARES Act broadened coverage, increased benefit levels, and extended the number of weeks of unemployment assistance available, relieving hardship and keeping the recession from being even worse. But the duration of these provisions was not tied to economic conditions. Policymakers left the fate of unemployed workers up in the air as the end-of-July expiration of the federal supplement to jobless benefits approached, and they ultimately let the supplement lapse for months. They again created uncertainty among jobless workers when they waited until the very last minute to address the pending expiration of PUA and PEUC at the end of December.

In the UI legislation before Ways and Means, the end-of-August cutoff date for the benefits in question is very problematic compared with the end-of-September date in President Biden’s plan. Unemployment, particularly among workers of color and workers without college degrees, will likely remain elevated in the fall. In addition, extending benefits an additional month better aligns their expiration with a time when Congress will be in session and focused on budget matters (with the fiscal year ending on September 30) and, thus, well positioned to further extend benefits. By contrast, Congress is typically not in session at the end of August, so the August timing makes a benefit lapse, which is harmful to families and disruptive to states’ ability to administer unemployment programs, more likely.