$600 Weekly Federal Unemployment Benefit Expires - Should the Federal Benefit Be Extended?

What’s the story?

• The $600 per week enhanced federal unemployment benefit created by the CARES Act expired Friday, July 31st, and lawmakers are at an impasse in approving an extension.
• The original premise of the $600 per week federal unemployment benefit as enacted in the CARES Act was for it, in conjunction with state unemployment benefits, to replace 100% of the wages lost by a person put out-of-work by the pandemic. 
• However, the implementation of the $600 federal benefit in addition to the state unemployment benefit has resulted in some recipients earning more on unemployment than they did in their previous jobs, which created a disincentive for those workers to return to their jobs as pandemic restrictions ease. 
• Before the CARES Act became law, Republicans sought to amend the unemployment provisions so that the federal & state unemployment benefits wouldn’t exceed an unemployment recipient’s prior income, but their amendment was defeated in a mostly party-line vote.
• There are several competing visions for what an extension of enhanced federal unemployment benefits would entail, ranging from Democrats’ HEROES Act to Republicans’ HEALS Act and more.

What might a federal unemployment benefit extension look like?

• Democrats’ HEROES Act: Enhanced federal unemployment benefits would continue at $600 per week through January 31, 2021, with a “soft cutoff” to allow individuals receiving state unemployment benefits at that time to continue to receive the supplement until March 31, 2021.
• Republicans’ HEALS Act: Enhanced federal unemployment benefits would continue at a rate of up to $200 per week through September, and starting in October they would be replaced with a payment of up to $500 that is designed to replace 70% of lost wages when combined with state unemployment insurance.
• McSally-Johnson Short-Term Extension: Sen. Martha McSally (R-AZ) & Sen. Ron Johnson (R-WI) each sought unanimous consent to pass a clean, one-week extension of the federal enhanced unemployment benefit to allow negotiations to continue without the lapse. But Senate Minority Leader Chuck Schumer (D-NY) objected to block their bill, and instead asked unanimous consent for passage of Democrats’ HEROES Act, which the Republicans objected to and blocked.
• White House 4 Month Extension: The Trump administration reportedly offered to extend the $600 per week unemployment benefit for four months, but it was rejected by Democrats as not being long enough.
• Collins-McSally-Romney Extension: Sens. Susan Collins (R-ME), Martha McSally (R-AZ), and Mitt Romney (R-UT) introduced legislation to continue a federal weekly unemployment benefit for three months at an average of $400 per week. It would offer the states one of two options: immediate 80% wage replacement; or a declining amount of $500 per week in August, $400 per week in September, or $300 per week in October.

— Eric Revell

(Photo Credit: iStock.com / Muni Yogeshwaran)