With record numbers of Americans seeking unemployment benefits after losing their jobs because of the coronavirus, Congress is set to significantly enhance aid.
A $2.2 trillion rescue package nearing final approval will, for four months, add $600 a week to standard unemployment benefits, which vary by state. It also provides funding for states to let people collect their payments immediately, eliminating a one-week waiting period. And it adds 13 weeks of coverage for people who have exhausted their existing jobless benefits.
Perhaps most significantly for a large swathe of America’s workforce, the legislation for the first time makes gig workers, independent contractors, the self-employed, people with limited work history and part-time workers eligible for unemployment benefits.
The expansion of the unemployment benefit system will bolster one of the nation’s major safety-net programs and provide support to the economy. More generous jobless benefits will enable people who are laid off to pay rent, mortgages, utility bills and other key expenses. That money, in turn, provides indispensable cash flow to banks, utility companies and other firms.
Federal Reserve Chair Jerome Powell said on Thursday that the goal behind the efforts the Fed has been making, as well as of the huge congressional aid package, is to tide the economy over until the virus outbreak is contained. The economy “may” be in recession now, Powell suggested, but a rebound should arrive by year’s end.
“One of the main things we’re trying to do by assuring the flow of credit in the economy … is to assure that that rebound, when it does come, is as vigorous as possible,” Powell said on NBC’s “Today” show.
Nearly 3.3 million Americans applied for unemployment benefits last week, according to the government figures released Thursday – almost five times the previous record set in 1982.
Among the people being hit hardest by layoffs as businesses have shut down across the country are employees of restaurants, hotels, airlines and retailers. Business activity at such companies has plummeted or vanished altogether as much of America stays home to help contain the spread of the virus. Incomes of taxi and ride-hailing drivers have cratered as passengers have all but disappeared.
Besides the expansion of unemployment benefits, the legislation provides aid for vulnerable workers in other ways, too. For many households, there will be a one-time direct payment of $1,200 per adult, plus $500 per child. There are also incentives for employers to keep workers on the payroll, including tax breaks. Small businesses that receive loans under the package won’t have to repay money they use to pay employees.
Congress has acted much more quickly to provide aid to workers than it did during the Great Recession. Unlike the aid that Congress provided a decade ago, the current rescue package will provide substantial assistance to workers who have lost their jobs and is intended to enable them to keep up with fixed expenses.
The Century Foundation, a progressive think tank, estimated in a study that up to 11 million workers could benefit, depending on how many lose their jobs. The foundation said the weekly $600 supplement would more than double the benefits currently available to unemployed people.