Last month Congress let emergency unemployment benefits expire, despite ongoing record levels of unemployment and a weakening economic recovery. While the U.S. House of Representatives passed a substantial relief bill in May that would have extended the enhanced unemployment benefits through the end of the year, the Senate was unable to come to an agreement. As a result of this inaction, the boosted benefits expired, slashing the incomes of thousands of West Virginians.
While President Trump issued an executive order to create a joint federal-state program that gives a reduced payment to unemployed workers, the plan is underfunded, inadequate, and no substitute for a real COVID-19 relief package from Congress.
One of the most pressing concerns for unemployed West Virginians and the state’s economy is the end of the CARES Act’s $600/week enhanced unemployment benefit. This provision helped make family budgets whole for laid-off workers, supporting the basic needs of more than 62,000 West Virginians while simultaneously providing a much needed boost to the economy. That benefit expired at the end of July, meaning unemployed West Virginians saw their incomes drop from an average of $836/week to just $236/week. Overnight, $44.5 million/week in income vanished from the state’s economy.
In response, President Trump issued an executive order creating a new joint state-federal program to issue weekly $400 payments to most Americans receiving unemployment benefits. The distribution of this reduced benefit would require the creation of a new joint state-federal system, a costly process that would likely take weeks or even months while families continue to fall behind on their bills.
The President’s proposal would fund weekly payments with $44 billion from the federal Disaster Relief Fund. But while the order authorizes payments through December 6, 2020, the amount of funding is sufficient for only five weeks of payments at current unemployment levels.
The proposal would also require states to pay at least 25 percent of the cost for workers’ benefits. With 62,000 continuing unemployment claims, and an unknown number of PUA claims, West Virginia would have to find at least $6.2 million every week to pay the claims, on top of $16.2 million it must pay every week in regular unemployment benefits. Again, this $6.2 million figure is likely an underestimate, since it does not include PUA claims.
While Governor Justice has indicated that the state will use part of the $1.25 billion that it received in CARES Act money to pay for this benefit, the state funding was not originally intended to do this. Under the CARES Act, it was the federal government’s responsibility to pay for the enhanced unemployment benefits, leaving West Virginia to use its allotted funding to address the myriad other pressing needs of the people. As such, to now shift part of that responsibility onto the states to make up for federal inaction creates an unfair burden on state governments and reduces the pool of money that could have otherwise been used to provide desperately needed relief to West Virginians.
What’s more, since the executive order establishes a new program, it may take longer than expected before West Virginia is able to create a system to provide these much-needed benefits. Keeping in mind that the state is already struggling to process record numbers of unemployment insurance claims, it could take weeks for this new system to emerge.
Finally, while the program is underfunded, cuts benefits relative to the CARES Act, and creates a cost and administrative burden to the state, it also leaves out the lowest-paid workers from receiving new benefits. The order specifies that only claimants receiving at least $100 in unemployment payments each week would receive the $400 payment. In West Virginia, the minimum weekly payment is just $24/week, meaning that the workers most in need of financial assistance would receive no additional benefit under the President’s plan.
The challenges and hardship of the pandemic recession demand a federal response that meets the scope of the crisis. Only Congressional action can provide the level of relief required to ensure that millions of children get enough to eat, that families keep their housing, that schools and communities receive the resources they need to contain the spread of COVID-19, and that state and local governments aren’t forced to make harmful cuts that jeopardize our future recovery. The band-aid approach to relief evident in the President’s executive orders is not what the country and West Virginia need to heal.