Trump's executive memo authorizing an extra $300 unemployment benefits could help millions of ... [+]
Updated August 28 with information about Rhode Island truing up benefits
More and more states are applying and being approved for the Lost Wages Assistance program, which will allow them to disburse $300 in extra weekly federal unemployment benefits to eligible unemployed workers. The program will provide a much need financial infusion to many of the 28 million unemployed Americans who have seen their benefits slashed since the $600 federal CARES Act bonus expired at the end of July; however, 1.5 million or more unemployed individuals may be excluded because of quirky program eligibility criteria. While some states, like New Hampshire and Louisiana, are making a concerted effort to maximize the number of unemployed workers who are eligible for the $300 benefit, most are not. Specifically, it behooves states to true up benefits for those receiving less than $100 a week and to provide an opportunity for workers to update their filing status and re-certify if they are unemployed for a Covid-related reason.
Trump Issues Memo For $300 Extra Federal Unemployment Benefit
With Congress gridlocked over the next coronavirus stimulus package and the July expiration of the $600 enhanced federal unemployment benefit, President Trump issued an executive memorandum on August 8 directing that money from the Department of Homeland Security’s Disaster Relief Fund (DRF) be repurposed for unemployment payments. The original memo called for the federal government and states to each contribute towards a $400 weekly benefit, with federal DRF funds covering 75 percent, or $300, and state funds covering the remaining 25 percent, or $100.
Amid fierce bipartisan blowback over the mandatory state contribution, the White House modified the program allowing states to count their current unemployment payments towards their $100 contribution. The result was more appetite from states to participate, but a lower benefit for most unemployed workers. So far, only three states - Kentucky, Montana, and West Virginia - are intending to provide an incremental $100 state match to unemployed workers, meaning those individuals will receive the full $400 weekly payment. Most others are not planning to provide additional funds, which will mean their unemployed workers may only receive $300 a week in extra unemployment funds; South Dakota announced that it was not participating in the program altogether.
Two Overlooked Program Parameters Could Exclude 1.5 Million Or More
While allowing existing state unemployment payments to count towards the state contribution requirement was a significant win, the Lost Wages Assistance (LWA) program includes two other unusual provisions that could exclude 1.5 million Americans or more from qualifying for extra payments.
According to guidance from the Department of Labor, an eligible claimant for LWA funds is someone who “(1) provides self-certification that he or she is unemployed or partially unemployed due to disruptions caused by COVID-19 and (2) receives, for the week of unemployment with respect to which LWA is sought, at least $100 of regular UC.”
The $100 hurdle could exclude six percent of regular unemployment insurance beneficiaries, or roughly 1.5 million Americans, according to labor economist and professor at the University of Illinois, Eliza Forsythe. Moreover, it could disproportionately hit low-wage and part-time workers, including many women. “That’s like double punishment for the poorest of the poor,” said Michelle Evermore, a senior policy analyst at the National Employment Law Project.
The White House claims that the $100-a-week-limit was “aimed at curbing fraud and making sure those who are receiving the federal benefit have already qualified for an unemployment program,” according to The Washington Post. However, it provided no specific evidence as to how the $100 limit would accomplish this. The hurdle baffled many experts, too. “I do not understand the incentive to commit a felony to apply for a benefit that is less than $100,” said Evermore.
There are two steps that states could take to mitigate the exclusions of the LWA program criteria and maximize how many unemployed workers qualify for the $300 extra unemployment benefit:
- True up benefits for those receiving less than $100 a week
- Provide an opportunity for workers to refile and update their filing status if they are unemployed for a Covid-related reason
Supplement Benefits For Those Receiving Less Than $100 Per Week
Only nine states set minimum unemployment payments above $100 a week: Arizona, Kansas, Michigan, Montana, New Jersey, New York, Ohio, Oregon and Washington. Workers in the other 41 states may have minimum payouts below $100 and, therefore, could be disqualified from receiving the $300 extra unemployment benefit simply because their minimum payout is too low. These 41 states should make changes, at least temporarily, to true up weekly unemployment benefits for those receiving less than $100 per week.
Follow New Hampshire and Rhode Island’s Lead
New Hampshire has committed to supplementing sub-$100 benefits. A frequently asked questions document recently published by New Hampshire’s Employment Security agency states that “for those people eligible for less than $100 in weekly unemployment benefits, New Hampshire is making additional changes to increase the minimum state unemployment benefit up to $100 so that all unemployed Granite Staters will be eligible.”
This step will ensure that the five percent of individuals receiving less than $100 per week in New Hampshire will also be eligible for the critical LWA funding. “The only stipulation there is that group will require a little more additional time, the program is a little more complex on the federal government’s side,” Governor Chris Sununu said. “They will be eligible for benefits, also going back to Aug. 1, but their checks probably won’t come for five or six weeks.”
Rhode Island has similarly agreed to true up benefits. On August 24, Scott Jensen, Department of Labor and Training Director Scott Jensen said that Rhode Island will temporarily increase the minimum benefit from roughly $57 to $100, during an interview with WPRI. This will make more unemployed Rhode Islanders eligible for the $300 benefit and enable them to "get some help that they need," Jensen added.
Other states, including Arkansas, Virginia, and Idaho have contemplated truing up benefits, but have yet to officially act.
- Arkansas: In Arkansas, the minimum weekly unemployment benefit is $81. Arkansas initially wanted to use part of the money it received in federal coronavirus relief funds to augment sub-$100 state benefits; however, it received guidance from the federal government that this was not allowed. "So absent some kind of action by the state, these folks would not be able to participate in the program," State Budget Administrator Jake Bleed said. The state is still looking at other options, including an executive order by Governor Asa Hutchinson. “There may be an option through an executive order of our governor to increase the amount coming out of the unemployment insurance trust fund to bring those folks up to $100," Bleed remarked.
- Virginia: Virginia’s state unemployment benefits startas low as $60 per week. The $100 minimum benefit hurdle would exclude 30,000 of the 260,000 people currently receiving benefits in the state, according to Governor Ralph Northam’s chief workforce adviser, Megan Healy. Some are looking to the General Assembly to temporarily raise minimums to $100 so unemployed Virginians would be eligible for the $300 federal payment. “We are thinking about how the people that aren’t going to get the 300 dollars, is there any extra support we can give them,” Healy said. “We’ll know that in a couple days.” “It would be a modest investment for Virginia,” said Pat Levy-Lavelle, of the Legal Aid Justice Center. “It would pay big dividends for Virginia workers and the Virginia economy.”
- Idaho: In Idaho, the minimum weekly unemployment benefit is $72. Idaho Governor Brad Little instructed the Idaho Department of Labor to look for ways to ensure individuals who receive less than $100 per week in unemployment benefits are also eligible for the $300 benefit. However, so far, no action has been taken.
Budget Impact Of Supplementing Sub-$100 Benefits
There was initial pushback from states about needing to fund an incremental $100 per week payment for all unemployed workers to qualify for the $300 extra federal benefit. Governor Mike DeWine (R-Ohio) was asked if his state could afford the new unemployment benefit. “The answer is, I don’t know yet,” he replied. Governor Andrew Cuomo (D-New York), tweeted, “executive Orders can’t replace legislative actions. States can’t pay 25% of unemployment costs. It’s simply impossible.”
This response was understandable given that state budget shortfalls are projected to reach $555 billion, according to the Center on Budget and Policy Priorities. Many states are facing tremendous budget pressures due to the expenses associated with containing coronavirus coupled with a reduction in tax revenues. Moreover, with uncertainty about the length and severity of Covid-19 outbreaks, states may need to expend even more money in the coming months.
While it is understandable that states balked at paying $100 extra for each unemployed worker given hemorrhaging state budgets, truing up benefits for those most in need would be a much smaller contribution for a much smaller population. For example, Virginia has 30,000 unemployed workers receiving less than $100 in benefits per week. Even if we assume that all 30,000 receive Virginia’s minimum benefit amount of $60 per week, the total outlay for the state to true-up benefits for three weeks would be $3.6 million.
As another example, Utah cites four thousand unemployed workers who don’t meet the $100 per week threshold. Even if we assume that all 4,000 receive Utah’s minimum benefit amount of $26 per week, the total outlay for the state to true-up benefits for three weeks would be $0.88 million.
Allow Workers To Refile And Modify Unemployment Reason
Another parameter of Trump’s LWA program is that individuals self-certify that they are at least partially unemployed due to disruptions caused by Covid-19. Individuals may not have fully appreciated the importance of accurately designating the reason for unemployment when they filed a claim or interpreted the requirement more narrowly than needed. Allowing unemployed Americans to update or refile should increase the number who qualify for LWA.
Follow Louisiana’s Lead
For example, in Louisiana, 20,000 unemployed workers are ineligible for the $300 extra unemployment benefit “because they did not list a Covid-19-related reason for being unemployed,” according to The Advocate. However, Governor John Bel Edwards is making a concerted effort to give individuals a chance to update their status. “They’re going to get an opportunity to refile. We’ll see what information they provide,” he said on his monthly radio program.
Louisiana’s Workforce Commission will send out e-mails to the 20,000 individuals asking them to update their filing status. The agency will call unemployed workers who don’t have an e-mail on file or have a faulty one. This proactive reach out is admirable and should be replicated by every other state.
While individuals need to ensure they are providing truthful information, it appears that the phrase “due to disruptions caused by Covid-19” could be interpreted expansively. In updated guidance from the Department of Labor (DOL), the agency includes a question, “for LWA, must the individual’s job separation be directly related to COVID-19?” In their response, DOL says that “the most recent job separation does not need to be directly related to COVID-19. At the time of self-certification for the program, the individual must be unemployed or partially unemployed due to disruptions caused by COVID-19.”
Texas is interpreting this to mean that as long as the reason you can’t find work is because of Covid-19, you should qualify for the $300 payment. Louisiana is too.
The Upshot
States have a monumental task ahead of them to reconfigure systems to disburse the $300 extra unemployment benefit provided by Trump’s Lost Wages Assistance directive. It behooves them to think inclusively and ensure that as many unemployed workers as possible qualify for the financial lifeline. This includes following New Hampshire’s lead to true up benefits for anyone receiving less than $100 a week in unemployment insurance. It also includes following Louisiana’s lead and proactively reaching out to workers to refile their claim and self-certify that they are unemployed, at least partially, due to Covid-19.
Further Related Reading:
3 States Intend To Pay $400 Extra In Weekly Unemployment Benefits, Not $300
Confirmed: Extra $400 Unemployment Benefit Extension Slashed To $300; State Match Optional
Earliest Start For Extra $300 Unemployment Benefit Is August 29 For Most States, Says FEMA
White House Modification May Cut Another $100 Before $400 Unemployment Benefit Extension Even Starts
Will $400 Unemployment Extension Start Soon? Don’t Count On It, Despite Trump’s Executive Order
Only Road To Second Stimulus Check, Real Unemployment Benefit Extension Runs Thru Congress
South Dakota Refuses Trump’s Extra $300 Unemployment Benefit; Declines Free Money
