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$ 5 per week: without federal financial assistance, the unemployed may remain poor

It seems that in the near future the unemployed will not receive another increase in weekly benefits after US President Donald Trump stopped negotiations on financial assistance in connection with the coronavirus. Writes about it CNBC.

Photo: Shutterstock

The move has sharply dashed hopes for a deal on issues such as increased unemployment benefits after weeks of negotiations between the White House and top Democrats in Congress appeared to be bearing some fruit.

In the absence of additional assistance, unemployed Americans will live off their current state or federal government benefits. In some cases, this is only $ 5 per week.

Even this money will disappear by the end of the year for millions of workers without the adoption of new legislation - they will be left without income if they cannot find another job.

“It looks like we won't get another financial aid package in the next few months,” said Ernie Tedeschi, an economist at Evercore ISI.

$ 5 per week

More than 26 million Americans are receiving unemployment benefits, according to the Labor Department. Almost seven months after the onset of the economic crisis caused by the COVID-19 pandemic, more than 1 million people are applying for benefits every week.

In August, states paid workers $ 305 per week (about $ 1 per month before tax) unemployment insurance on average, according to the Department of Labor.

Some paid much less. Louisiana and Mississippi, for example, paid just over $ 180 per week ($ 720 per month), the lowest state average.

On the subject: Some states have overpaid unemployment benefits and want to be refunded

However, some workers got even less. States pay unemployment benefits ranging from the minimum to the maximum weekly amount. These ranges vary considerably from state to state.

For example, in Hawaii, the minimum is $ 5 per week. Just nine states - Arizona, Kansas, Michigan, Montana, New Jersey, New York, Ohio, Oregon, and Washington State - pay a minimum of over $ 100 per week.

On average in the United States, the minimum weekly state benefits are $ 61 per week (approximately $ 244 per month).

"It's hard to live"

According to Labor Department data, unemployment benefits replaced about 39% of the average American's lost wages in the second quarter of this year.

“It's pretty hard to live off this for a long period of time,” said Eliza Forsyth, assistant professor and labor economist at the University of Illinois.

The $ 600 per week federal supplement, mandated by the CARES Act, passed in March by the $ 2,2 trillion aid law, more than replaced previous wages for many workers. But these additional payments ended at the end of July.

A follow-up measure by the Trump administration, the Wage Loss Assistance Program, gave workers a federal benefit of $ 300 for up to six weeks.

According to economists, the expiration of these payments is likely to lead to a serious reduction in the income of millions of people. Meanwhile, according to the Bureau of Labor Statistics, there are two unemployed people for every job, and childcare responsibilities and health risks may prevent some from returning to work.

On the subject: 10 US regions with the highest unemployment rate

“Very few people can stay in their home with all their debts and obligations if they earn only 35-40% of what they earned before,” Forsyth said.

Phased approach

House Democrats recently passed aid legislation that extended the $ 600 weekly subsidy until January. Treasury chief Stephen Mnuchin, who negotiated with House Speaker Nancy Pelosi on behalf of the White House, proposed a plan that would suggest paying $ 400 a week by the end of the year.

Although Trump abruptly canceled these negotiations, he made it clear that he is ready to partially pass the law on items such as one-time incentive checks for individuals, airline funding and salary payments. It is unclear whether an increased unemployment benefit will be among the measures taken.

Break for self-employed

Meanwhile, at the end of the year, millions of unemployed were threatened with a financial crisis.

The Pandemic Unemployment Assistance Program for the self-employed, contractors, freelance workers, and other workers who are generally not eligible for state unemployment insurance ends after December.

Without additional legislation, these workers will no longer receive any unemployment benefits.

The CARES Act also extended state unemployment insurance for up to 13 weeks in addition to the traditional six months. This program, Pandemic Unemployment Compensation, also ends after December. This will affect 10 to 15 million people.

Read also on ForumDaily:

Some states have overpaid unemployment benefits and want to be refunded

The rate of American job loss has exceeded the rates of the Great Depression

Has America become great again: what Trump has achieved in four years in power

New round of financial aid: what did the Republicans and Democrats agree on

Miscellaneous In the U.S. dole

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