Trump’s New Jobless Benefit Trickles Out With Two States Paying By Bloomberg

Trump’s New Jobless Benefit Trickles Out With Two States Paying


© © Reuters Trump’s New Jobless Benefit Trickles Out With Two States Paying

(Bloomberg) — The emergency benefit payments ordered two weeks ago by President Donald Trump are just starting to trickle into jobless Americans’ wallets.

Participation is up to individual states, and as of Monday just two — Arizona and Texas — had begun paying out the supplemental $300 a week in benefits. Of the other states that have received funding for the program, Missouri hopes to start paying by this weekend; Utah and New Mexico anticipate it will be a few weeks before payments reach residents; Colorado is targeting mid-September; Iowa didn’t provide a timeline; and Louisiana didn’t respond to requests for comment, though it said on Aug. 19 it expected to distribute benefits “within the next week.”

As of Monday, 30 states had been approved for the program, with updates occurring daily. South Dakota publicly said it won’t participate.

The partial, gradual rollout limits the immediate impact of Trump’s stopgap action to provide $300 a week in additional federal aid for most jobless claimants, leaving families in a lurch as they wait for the supplemental income and holding back the economy more broadly. Lawmakers have failed to reach agreement on extending $600-a-week supplemental benefits, which expired in July and helped bring some semblance of regional equity to America’s patchwork social safety net.

Part of the reason for the slow start is that implementing the new program, known as Lost Wages Assistance, falls on overwhelmed state unemployment offices that have already struggled to process applications and deliver benefits during the pandemic. Another complication is that the program’s funding is coming from disaster money at the Federal Emergency Management Agency, an agency state officials are not accustomed to working with for unemployment-insurance matters.

The program requires working with a new agency and creating a new system with new rules and new reporting requirements, said Bill McCamley, head of the New Mexico Department of Workforce Solutions.

“If we don’t follow the rules correctly, we could be penalized in the future,” he said.

Tax Confusion

That’s what happened to some extent earlier this year when states tried to quickly implement a new federal program — Pandemic Unemployment Assistance, or the federal program that extends jobless benefits to those not traditionally eligible like gig workers and the self-employed.

In New Mexico, the state launched the PUA program allowing applicants to use their 2018 tax information, but learned a week later that applicants had to use 2019 information instead. In other cases, confusion over how PUA recipients needed to certify or who qualified for the new aid led to other problems for states.

If, for example, a state paid out PUA benefits for a week the unemployed recipient shouldn’t have received payment for, the benefits have to be recouped, said Michele Evermore, a senior policy analyst at the National Employment Law Project. That means reclaiming money from people who have often already spent it.

“If I were a state agency director, I would definitely — before I start handing out money that I might have to pay back at a time when there’s no way I can pay it back — I’d be pretty clear on what every single detail is,” Evermore said.

Even in a best-case scenario, the program’s benefits would be limited. FEMA has been authorized to provide up to $44 billion in support, which economists estimate would last just one to two months if paid as intended to millions receiving jobless benefits.

Income Support

Such stimulus has proved essential to consumer spending: Unemployment benefits made up about 7% of Americans’ incomes in June, the biggest share on record. Without any supplemental unemployment payments, one paper estimates local spending would fall 44%.

The technicalities of Trump’s order — and the interpretation of them — create a host of challenges. The U.S. Department of Labor released a fact sheet on the program early last week with 29 questions and answers.

One key hitch: States are required to share the costs to some extent, but states can count the money they’re already paying toward unemployment benefits in this calculation. There are also administrative hurdles in determining precisely who’s eligible.

“Any more uncertainty on any level is just the bane of these state agencies’ existence,” Evermore said.

©2020 Bloomberg L.P.

 



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