Covid-19 jobless benefit fix needed

This week, millions of unemployed workers are receiving the final installment of the additional $600 a week jobless benefit under the CARES Act.  In West Virginia, the benefit expires for about 250,000 workers.

The $600, added to the regular state jobless benefit which has a cap of $424, has been an important lifeline to West Virginians who have lost their jobs through no fault of their own because of the pandemic.

There is general agreement among Democrats and Republicans, the House and the Senate, that an extra unemployment benefit should continue, but there is no consensus yet on how much the payments should be and how they should be calculated.

House Democrats want to maintain the $600 payments at a cost of about $19 billion a week. Senate Republicans believe the $600 is too much and they are looking for ways to scale it back.

The Heritage Foundation, a conservative think tank, estimates that 70 percent of the workers receiving the additional $600 are making more on unemployment than they did on the job.  That creates a disincentive to work and makes it harder for struggling businesses to retain their employees.

In West Virginia, a laid off worker receiving the maximum state benefit plus the additional $600 is being paid the equivalent of $26 an hour. Frankly, who could blame someone, when faced with the choice, of taking the greater amount?

So, the additional benefit should be smaller.

However, that is not as easy as it sounds.  Congress appropriates the money, but it will be up to the state unemployment offices to distribute the funds, and that is where it gets complicated.

One idea is to pro-rate the $600 to the size of the regular state benefit.  For example, if a worker qualifies for an amount equal to 80 percent of the maximum state benefit, that individual would also receive 80 percent of the $600.

Another idea is to continue the $600 for a couple more weeks, then gradually scale it back, week after week, to zero. And another proposal would eliminate the $600 but pay a higher rate of unemployment benefit based on the worker’s previous earnings.

But each of those proposals would be a logistical nightmare that could take weeks, perhaps months, for state unemployment offices to execute.  Those offices are still trying to catch up on the new Pandemic Unemployment Assistance benefit that was created under the CARES Act.

A better approach would be to just reduce the benefit amount to a number that still provides needed extra help but does not entice workers to stay at home.  That would also be a manageable change for the unemployment offices, speeding up claims and avoiding mass confusion among the unemployed.

 

 





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