Republicans just proposed a new idea for coronavirus unemployment benefits — and it's less generous than the $600 federal boost to state payouts
Senate Republicansunveiled a proposal to scale back federal unemployment benefitsfrom $600 to $200 a week for two months, then implementing a 70% wage replacement scheme for unemployed Americans.
- The GOP plan released on Monday would give states until October to transition onto the new system, and those struggling could request a two-month waiver afterward.
- "It'll be hard to implement, and it's a solution in search of a problem," Michele Evermore,
policyanalyst at the National Employment Law Project, told Business Insider of the GOP unemployment plan.
- She said it could take four to five months instead for state unemployment offices to implement a new wage replacement program given their large backlogs and antiquated technology.
Senate Republicans are proposing to scale back the $600 federal boost to unemployment benefits to $200 a week for two months, seeking a temporary measure to buy time for state systems to implement a 70% wage replacement program for jobless people.
Sen. Chuck Grassley introduced the plan on the Senate floor, saying it was more beneficial for the unemployed compared to the $25 weekly boost that Democrats implemented during the Great Recession a decade ago.
Under the proposal, the federal payouts would be kept on top of state unemployment benefits through September. In October, that would be replaced with a new system that caps benefits at 70% of a jobless person's lost wages with the federal government kicking in a maximum amount of $500.
States struggling to make the transition at that point could request a two-month waiver. If enacted, the plan would reduce the amount of benefits jobless people are receiving by an average of 44%, according to an estimate from Ernie Tedeschi, a former Treasury Department economist in the Obama administration.
Republicans have long sought to scale back the $600 federal boost to state unemployment checks, with some conservatives calling to scrap it entirely. They say the supplement disincentivizes people from returning to work since it allows many people to earn more from the government than their past job.
Democrats are pushing to extend the beefed-up benefits through January 31, arguing the
Many experts credit the beefed-up unemployment payments with prompting quicker rebounds in consumer spending, particularly among low-income households that weathered a disproportionate share of job losses because of the pandemic.
Congress approved the $600 weekly supplement in March as part of the
Both parties are far apart on the scope of another economic relief package with a likely clash over unemployment benefits. Democrats rejected the GOP proposal, and Sen. Ron Wyden of Oregon called it "a punch in the gut" for jobless people.
The GOP spending package has a $1 trillion price tag, and Democrats support a competing plan of their own that's three times larger.
Read more: The Trump administration and Senate Republicans are quibbling over the next coronavirus stimulus. Here's what's in store for the final bill, including more checks, loans for small businesses, and $100 billion to reopen schools.
"It's a solution in search of a problem"
The number of unemployed people outnumbers available jobs around four-to-one, according to data from the Bureau of Labor Statistics. Economists project the unemployment rate, which stands at 11.1%, will remain in the double-digits for the rest of the year.
Some unemployment experts say that the Republican proposal may be a logistical nightmare to carry out, given state benefit systems are already overwhelmed with claims.
"It'll be hard to implement and it's a solution in search of a problem," Michele Evermore, policy analyst at the National Employment Law Project, told Business Insider.
She added that two months was "definitely" not enough time for state systems to phase in a new wage replacement formula, and estimated it could take four to five months instead, citing a recent warning to Congress from the National Association of State Workforce Agencies.
Unemployment agencies across the country are still backlogged and processing over 2 million claims a week, Evermore said, and implementing a new system to calculate a person's past wages could push them to their breaking point.
She expressed particular concern for new entrants into the work force who had job offers revoked due to the pandemic and how the GOP proposal could leave them out.
"Some people are on PUA because they got a job offer that was rescinded, so their earnings would drop to zero," Evermore said, referring to an unemployment benefits program for independent contractors and freelancers.
The GOP also proposed a fresh round of relief payments for jobless Americans along with additional small business loans under the Paycheck Protection Program.
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