Extra $600 in unemployment benefits could expire before July 31 - here's why
Officially, the boosted benefits -- part of the $2.2 trillion CARES Act passed by Congress at the end of March -- are not set to end until July 31
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Out-of-work Americans depending on the extra $600 a week in unemployment may be in for an unpleasant surprise: The sweetened benefits could expire almost a week earlier than initially anticipated.
Officially, the boosted benefits -- part of the $2.2 trillion CARES Act passed by Congress at the end of March -- are not set to end until July 31. But states will only pay the extra cash through the week ending July 25 or July 26, even as the coronavirus pandemic and related economic lockdown continue to trigger a historic number of layoffs.
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"The (Federal Pandemic Unemployment Compensation) $600 can be paid for weeks ending no later than the week ending prior to Friday, July 31, 2020,'' the U.S. Department of Labor said in a statement to USA Today, which first reported the news. "For all states except (New York), that is Saturday July 25th. New York’s end date is Sunday, July 26th."
States administer unemployment benefits on a weekly or biweekly basis with a defined end date on Sunday or Saturday. But the CARES Act stipulates the extra cash will end "on or before" July 31, 2020 -- a Friday.
Because of the unemployment payment schedules of most states, that means the extra cash will end either the prior Saturday (July 25) or Sunday (July 26). The confusion of the language led some states to list July 31 as the end date of the benefits, when it's actually a few days earlier.
New York's department of labor told USA Today that it would update the end date on its website to reflect the week ending July 26 as the real expiration of the sweetened benefits. Alabama's department of labor also said it would alert individuals receiving the money of the change.
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“We will be messaging it at least two weeks in advance,” Tara Hutchison, a spokeswoman for the state's labor department, said in an email to USA Today.
The latest jobless claims figures from the Labor Department showed that another 1.48 million Americans filed for unemployment benefits last week, pushing the total number of job losses to 47 million Americans. The speed and magnitude of job losses are without precedent and are more than double what the U.S. saw during the global financial crisis a decade ago.
“The labor market continues its lethargic recovery as we see another week of only modest declines in the tens of millions of Americans continuing to claim UI benefits amid an ongoing pandemic," said Daniel Zhao, a senior economist at Glassdoor. "While recent economic indicators like the May jobs report stoked optimism for a swift recovery earlier this month, the slow improvement in continuing claims puts a damper on those high hopes."
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Now, economists are increasingly warning of a second wave of job losses. According to an analysis by Bloomberg Economics, 6 million jobs are potentially on the line, including higher-paid supervisors in sectors where frontline workers were hit first, like restaurants and hotels. It could also have a ripple effect in industries such as professional services, finance and real estate.
Democrats want to continue the extra $600-a-week payment beyond July. In the $3 trillion HEROES Act they passed in May, House Democrats proposed extending the $600 payments until at least the end of January. The bill also offered a so-called “soft cutoff,” which would give the extra money to individuals who needed it through March 2021.
“We must think big for the people now, because if we don't it will cost more in lives and livelihood later,” House Speaker Nancy Pelosi said in May.
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But Republicans and the White House have argued that the sweetened benefits are actually disincentivizing some Americans from returning to their jobs, thus hindering the economy’s recovery from the virus-induced shutdown.
Larry Kudlow, a senior economic adviser to President Trump, has suggested the administration is open to a back-to-work bonus to encourage Americans who are receiving unemployment benefits to return to work if given the chance.
Roughly two-thirds of workers on unemployment are receiving more government aid than what they earned at their old job, according to a paper written by economists at the University of Chicago's Becker Friedman Institute. Once the $600 per week expires at the end of July, the typical unemployment check -- which varies by state -- will return to below $400 per week. That's an income reduction of roughly 60 percent.