Relief Bill Came Too Late to Avert Unemployment Lapse

Unemployed woman sitting on stairs looking depressed - stock photo
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Potentially millions of people reliant on two pandemic unemployment relief programs have seen their benefits interrupted despite a last-ditch effort by lawmakers to avert a lapse. 

The two programs—renewed in legislation signed Dec. 27—expired a day earlier, setting in motion delays that have lasted weeks or are still unresolved in some cases. For example, in Arkansas, payments might not be released for at least one of the reinstated programs until mid-February;  Colorado says it has yet to process any claims this year; and Michigan only started resuming payments on Jan. 19 to some recipients after the year-end interruption. 

Key Takeaways

  • Lawmakers scrambled to avoid an unemployment benefit “cliff” at the end of last year, but many—potentially millions—saw their benefits disrupted anyway.
  • Two pandemic unemployment programs were reinstated in the latest economic relief package, but not in time to avoid payment delays of weeks or more in many states.
  • Failing to reach an agreement earlier made the delays inevitable, consumer advocates say.

The lawmakers who wrote the $900 billion pandemic relief bill extended the Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) programs through March 14 in hopes of averting what some called an unemployment “cliff” that would have cut off benefits in the midst of a worsening pandemic and faltering job market. But the bill wasn’t passed until Dec. 21 and President Donald Trump delayed signing it for another six days, threatening to veto if it didn’t include bigger stimulus checks.

“Congress and President Trump put states in an impossible bind and delays were inevitable,” said Andrew Stettner, a senior fellow at The Century Foundation think tank, in an email. “These kind of delays make it extremely difficult for people to meet their most basic needs.”

The PUA covers people who are otherwise ineligible for benefits, such as independent contractors and gig workers, while the PEUC covers those whose regular state-administered unemployment benefits would have long been exhausted. Besides being reinstated by the new legislation, both programs were lengthened so that people are eligible for an additional 11 weeks of benefits.

Not only was there a lapse for unemployed people who would have still been eligible for benefits after the Dec. 26 deadline, but some people who had exhausted their benefits have had to recertify in order to take advantage of the extra weeks. As of Jan. 22, just 28 states had confirmed they were making PUA payments again and only 24 states had confirmed they were resuming PEUC, according to an analysis by Stettner’s Century Foundation. 

“Congress knew for months that this program would sunset at some point,” said Edgar Ndjatou, executive director of Workplace Fairness, an advocacy group. “It’s unfathomable where we find ourselves in this position where the program did sunset, and a lot of people lost access to benefits. This was all predicted.”

Millions May Have Been Affected

It’s hard to say how many people saw a lapse, but Department of Labor data for the week immediately following the Dec. 26 expiration of the programs—Dec. 27 through Jan. 2—shows both programs had the largest weekly declines since they were established in March.

For that week, the number of people filing claims under PUA fell by 1.74 million to 5.7 million, and under PEUC, by 1.14 million to 3.03 million. The following week, claims bounced back, though not entirely: for PUA, there were 1.63 million more claims, and for PEUC, 836,596 more. 

The figures show there was a lapse in benefits for people who still need them, according to Heidi Shierholz, an economist at the Economic Policy Institute, a progressive think tank. And the total of 2.88 million fewer claims that first week may be an underestimate of the true size of the problem because even individuals claiming benefits could be experiencing delays, according to Stettner. 

Indeed, state unemployment agencies were bombarded with messages from workers who said they were enduring delays in getting their benefits restored and suffering financial problems because of it.

“I am afraid of losing my house at this point,” one Twitter user wrote to the New Jersey Department of Labor on Jan. 21. 

While the programs have been extended through March 14, they should go for much longer to provide financial stability to workers, especially independent contractors, amid the uncertainty of the pandemic economy, Ndjatou said.

President Joe Biden has proposed extending both programs through September as part of a $1.9 trillion rescue package. He’s also said he wants to work with Congress on ways to automatically tie the duration of the programs to economic conditions so that future legislative delays don’t undermine people’s financial stability.