Republican Jobless Plan Could Take Five Months to Execute

The proposal favored by Republicans for extending supplemental unemployment benefits aiding millions of Americans made unemployed by Covid-19 could take some states the rest of the year to implement.

That’s one takeaway from a memo prepared by the National Association of State Workforce Agencies, obtained by Bloomberg News, on plans for trimming jobless benefits that expire this month. At stake is sustaining support to an economy confronting renewed business-closing measures thanks to record virus cases.

Replacing the expiring $600-a-week supplements with a percentage of a worker’s former wages could take most states eight to 20 weeks to implement, after they receive Department of Labor Guidance, the July 23 memo indicates. Reprogramming aged computer systems would take the states a wide range of timelines to implement, with some moving faster.

“It’s one thing to add this administrative burden when states don’t have any other issues, but doing this in a period with so many things coming at states at once, it’s just a nightmarish proposal,” said Michele Evermore, a senior researcher and policy analyst for the National Employment Law Project.

More Time

Republicans released a proposal Monday that calls for lowering the jobless-benefit supplements to $200 a week from $600 and switching to a 70% wage-replacement formula by October 5. States can apply for an additional two months if they need more time to reprogram their computers, falling weeks short of estimates of they time they will need.

Senate Finance Chairman Chuck Grassley said his party’s plan for reducing pandemic unemployment benefits and tying them to a worker’s wages is more responsible than a blanket extension of the current arrangement.

“When you pay people more not to work than they would get working, what do you expect? People will not work,” he said.

Meantime, state unemployment offices, which distribute the payments, are still struggling to process the $600-a-week payments approved months ago.

Still Waiting

More than $100 billion of unemployment benefits have yet to reach recipients after it took some states months to make the changes to their computer systems, according to Bloomberg calculations. Florida didn’t begin processing claims for self-employed workers until the final week in June, approximately two months following the passage of the CARES Act.

The plan is Republicans’ opening bid for extending unemployment benefits, which began expiring over the weekend, as negotiations with Democrats begin in earnest this week. Democrats have proposed extending the $600 flat-rate amount through the end of the year and then phasing down the payments as economic conditions improve.

“It is the ultimate disconnect with what is being experienced by real Americans if they think $200 bucks is enough,” said Representative Dan Kildee, a Michigan Democrat.

Nearly half of people currently receiving unemployment insurance are covered under the special pandemic benefits and don’t necessarily have a wage history that is easy to determine. That benefit currently covers gig-economy workers and even people who have had a job offer rescinded because of the pandemic and may not have a wage history, Evermore said.

Long Term

Moving to a wage-replacement formula is a sign that lawmakers are thinking about the long-term future of the unemployment benefit system, but it will be very difficult to implement in two months, said Michael Graetz, a professor of law emeritus at Columbia Law School and former Treasury Department official.

“States are going to have to collect wage data on freelance workers,” who make up a large portion of the workforce, he said.

Even for traditional salaried workers, state systems aren’t currently designed to replace a set portion of workers’ wages. Arizona, for example, has a maximum state unemployment benefit of $240, only a fraction of many workers’ past wages.

The Republican plan would require state systems to verify an employee’s prior pay, calculate their state benefit and then add a federal amount to reach 70% of prior wages, meaning that the calculation will be different for every worker.

The proposal would also add another item to unemployment offices’ to-do lists: they must notify jobless claimants and employers about state work requirements, an individual’s rights to refuse to return to work or to refuse suitable work, and how an individual can contest the denial of a claim as a result of these requirements.

There were over 16 million people on jobless claims rolls for the week through July 11, according to the Labor Department. The total figure, including the pandemic assistance program, is about double that, though that estimate is inflated by multiple counting and illegitimate claims -- another demonstration of the challenges in the system’s processing.

©2020 Bloomberg L.P.

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