Blog Posts > Letting Enhanced Unemployment Benefits Expire Would Create Hardship for Families and Hurt West Virginia’s Economy
July 16, 2020

Letting Enhanced Unemployment Benefits Expire Would Create Hardship for Families and Hurt West Virginia’s Economy

Since the end of March, when unemployed West Virginians began receiving Pandemic Unemployment Compensation (PUC) payments – the $600 per week enhancement to unemployment benefits that were part of the CARES Act – West Virginia has received at least $753 million through the federally funded program.

However, that aid is set to expire at the end of this month, despite continued weakness in the economy and increasing cases of COVID-19. Without an extension of the PUC benefits from Congress, thousands of West Virginia families will be harmed and the state’s fragile economic recovery will be threatened.

The graph above shows how the extra $600 per week has boosted West Virginia’s economy, but it is actually an underestimate. All West Virginians who receive either unemployment insurance (UI), Pandemic Unemployment Assistance (PUA, jobless benefits for workers not traditionally covered by UI) or Pandemic Emergency Unemployment Compensation (PEUC, jobless benefits for those who have exhausted the traditional 26 weeks of benefits) receive the extra $600 weekly PUC payments. Because West Virginia has not yet reported the number of PUA claims, $753 million in total payments, and $42 million last week, is a low estimate.

This boost to unemployment benefits has helped West Virginia families make ends meet and allowed them to continue to buy the things they need while being out of a job. In fact, during the same time frame when enhanced UI benefits began to be paid out in West Virginia, consumer spending stopped its steep decline and began to grow. While we saw modest growth in consumer spending as businesses started reopening, the major spike in spending happened when enhanced unemployment payments – as well as the stimulus payments in the CARES Act – began being received.

Not only have the enhanced unemployment benefits helped unemployed West Virginians stay afloat, those benefits have also bolstered increased demand for goods and services, helping preserve jobs for those still employed. During the Great Recession, UI generated $2 in economic activity for every $1 that was spent through it, ultimately reducing the decline in Gross Domestic Product (GDP) by 18.0 percent and preserving as many as 1.8 million jobs nationwide. That multiplier effect would mean that the PUC payments in West Virginia have generated $1.5 billion in economic activity since March, equal to 1.9 percent of West Virginia’s total 2019 GDP.

According to an estimate from the Economic Policy Institute, extending PUC through July 2021 would boost personal income in the state by $2.3 billion, representing 4.5 percent of West Virginia’s GDP and supporting more than 22,000 jobs.

The CARES Act set an arbitrary expiration date for PUC of July 25, creating a cliff that the economy will fall over unless Congress acts to extend it. Meanwhile, the employment situation has only slightly improved, and the number of unemployed West Virginians is at record levels. What’s more, COVID-19 cases continue to grow, threatening those businesses and jobs that have returned. The U. S. House passed the HEROES Act, which would continue expanded benefits for another six months. Unless the Senate agrees quickly to extend PUC benefits, nearly 70,000 West Virginia families will see their unemployment benefits slashed from an average of $842 per week to just $242 per week starting in August, ensuring that the current recession will be longer and more painful.

***UPDATE***

This document from the U.S. Department of Labor shows that $93.9 in PUA claims have been paid out in West Virginia through July 11. In addition, the total amount of PUC payments, the $600 per week enhancement to unemployment benefits, though July 11 is $832.8 million, higher than the above estimate of $753 million, which did not include PUA claims.

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