US aid law to massively expand unemployment benefits

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NEW YORK – With a record number of Americans claiming unemployment benefits after losing their jobs due to the coronavirus, Congress will make major improvements to the program.

The $ 2.2 trillion bailout, which is nearing final approval, will add $ 600 a week to standard unemployment benefits for four months, which varies by state. It also provides funds to states so that people can collect their payments immediately, eliminating a week-long wait. And it adds 13 weeks of coverage for people who have exhausted their existing unemployment benefits.

Perhaps most importantly to a large segment of American workers, the legislation for the first time qualifies gig workers, independent contractors, the self-employed, people with limited work experience, and part-time workers to receive unemployment benefits.

Such short-term measures are intended to sustain a system that is not designed to cope with the sudden influx of people into the ranks of the unemployed.

Nearly 3.3 million Americans filed for unemployment benefits last week, according to government figures released Thursday – almost five times the previous 1982 record.

The people hardest hit by layoffs due to company closures across the country include employees at restaurants, hotels, airlines and retailers. Businesses for such companies have collapsed or disappeared as much of America is staying home to contain the spread of the virus. Taxi and ride hailing driver revenues have skyrocketed as passengers have all but disappeared.

Brian Alectine, who drives for Lyft and Via in New York City, stopped picking up passengers a week ago fearing he might contract the virus. He hopes he can get unemployment benefits. Even so, he fears that he may need financial help before the payments begin.

Alectine still has to pay $ 350 a week to rent his car, along with the rent for the apartment he shares with his wife, 4-year-old daughter, and mother-in-law.

“I know my landlord will text me on April 1st and ask if the money is ready, so I’m very worried about these things,” he said.

In addition to expanding unemployment benefits, the law also provides other forms of assistance for vulnerable workers. Many households pay a one-time direct payment of $ 1,200 per adult plus $ 500 per child. There are also incentives for employers to keep employees on the payroll, including tax breaks. Small businesses that receive loans under the package do not have to repay any money they use to pay their employees.

Congress acted much faster to provide aid to workers than it did during the Great Recession. Unlike the aid Congress gave a decade ago, the current bailout will be of significant help to workers who have lost their jobs and will allow them to keep up with fixed costs.

The Century Foundation, a progressive think tank, estimates in a study that up to 11 million workers could benefit, depending on how many lose their jobs. The foundation said the $ 600 weekly supplement would more than double the benefits currently available to the unemployed.

And Goldman Sachs economists calculate that for the average worker who earns about $ 1,200 a week, the increased weekly benefit should completely make up for their lost wages. And for lower-income restaurant and hospital employees, it is said to offer more than their usual salaries.

Still, economists warn that it will not be enough to sustain their past spending or prevent a deep recession.

“You have to bring this money to the households to pay those bills for food, shelter and medicine,” said Jeffrey Bergstrand, professor of finance at Notre Dame. But he added, “This is not a stimulus package. It should provide liquidity and protect against deeper damage and prevent the possibility of a depression. “

Jade Apisuk, who was fired from his job selling wine and spirits to hotels in and around Walt Disney World, said the extra money will be a “big help”.

“That means I can buy groceries and freeze them,” said Apisuk, who lives in Orlando, Florida. “My number one priority is to only provide food and shelter.”

Apisuk said he could apply for unemployment benefits early Tuesday morning after trying for the first time on Monday when the website kept crashing. He said he would get $ 275 a week from the state. That accounts for only 20% of his loss of wages and is barely enough to cover his usual grocery bills. He has told his two sons that they will not get their hair cut because they are not going to school anyway.

Megan Greene, an economist and senior fellow at the Kennedy School of Government at Harvard, said some of the benefits’ effects are limited by the fact that many state unemployment systems are overcrowded with applicants. The flood of applications could prevent thousands of unemployed from receiving aid. Congress has already passed a bill giving states $ 1 billion to help them administer the program. But it will take time to have an impact.

Another point of criticism is that the one-time checks only go to those Americans who filed a tax return this or 2019.

Josh Bivens and Heidi Shierholz, economists at the Progressive Economic Policy Institute, estimate that around 30 million people, including the elderly and people on very low incomes, fail to file tax returns.

That means “they will have to file tax returns to get this aid during this pandemic,” the economists wrote.



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