The extra $600 boost in unemployment benefits expires soon. What comes next?
Yahoo Finance Video
Updated
The enhanced unemployment benefits included in the CARES Act expire at the end of July. Yahoo Finance's Jessica Smith takes a look at what lawmakers want to do about it.
Video Transcript
JULIE HYMAN: In DC, Majority Leader Mitch McConnell says the Senate's going to be working on another round of coronavirus relief next week. But one of the biggest issues up for debate-- we've talked a lot about it-- the enhanced unemployment benefits included in the CARES Act. Our Jessica Smith joins us with this week's stimulus check. Jess.
JESSICA SMITH: Yeah, Julie, Republican leadership has been adamant-- they are not going to extend the extra $600 a week. The White House told me it is a priority in the next round of relief for the president. But Democrats are still putting up a fight. I talked to some of the people who are depending on these benefits and some of the lawmakers who are trying to figure out what's next.
TERESA IBARRA: This whole thing has just been a nightmare, and I never thought I would be in this situation.
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JESSICA SMITH: In early May, Teresa Ibarra was furloughed from a Memphis hospital. In New Jersey, Diana Bernardo had just started her dream job when the pandemic hit. She was laid off in March, only three weeks after she started.
DIANA BERNARDO: So it was really a blow to me mentally and emotionally, as well as, obviously, financially.
JESSICA SMITH: The women were two of the tens of millions of Americans filing for unemployment amid the pandemic. As state systems became overwhelmed, they waited for weeks for their benefits. And when the money finally came through, the extra $600 a week changed everything.
DIANA BERNARDO: It makes all the difference in the world.
JESSICA SMITH: But now the enhanced payments are set to expire at the end of July, leaving people like Ibarra wondering what they'll do.
TERESA IBARRA: So basically what that would mean is, I guess I'd have to prioritize and buy food and buy the things that I couldn't do without, and maybe not pay my mortgage for a couple of months.
JESSICA SMITH: Senator Ron Wyden says Americans shouldn't have to make those decisions.
RON WYDEN: This is not a question of Americans getting $600 a week and spending it on luxuries. They are very often at the lowest end of the economic ladder.
JESSICA SMITH: Wyden and Senate Democratic Leader Chuck Schumer have introduced the American Workforce Rescue Act. It would extend the $600 weekly payments until a state's unemployment rate falls below 11%. After that, the weekly payment would drop by $100 for every percentage point decrease in the state's unemployment rate.
RON WYDEN: We've had thousands and thousands of more cases just in the last few days. Nobody knows what is coming. But this ties the benefit to conditions on the ground.
JESSICA SMITH: GOP lawmakers and the Trump administration say the enhanced benefits discourage people from returning to work.
ROB PORTMAN: For most people who are on unemployment insurance, they're actually making more on unemployment insurance than they would at work. That's made it tough for some small businesses in particular to get people to come back.
JESSICA SMITH: Some Republicans, like Senator Rob Portman, are pushing to give workers a return-to-work bonus, $450 extra each week for six weeks after they go back to their jobs.
ROB PORTMAN: It gives workers a chance to reconnect with their business. Wherever they were working is likely where they get their health care and likely where they have their retirement savings, if they have a 401(k).
JESSICA SMITH: But Bernardo worked in hospitality, and she doesn't see how that bonus would help workers in hard-hit industries.
DIANA BERNARDO: It's just so uncertain right now. I don't know that there are any job prospects. I know a lot of hotels are suffering.
JESSICA SMITH: The big question is what party leaders and the White House will back. But Portman says he's open to compromise, potentially a smaller enhanced unemployment benefit in addition to a bonus.
ROB PORTMAN: And how do we, in a creative way, provide an incentive for people to go back to work safely?
JESSICA SMITH: Democratic Senator Mark Warner acknowledges the concerns about the extra $600, but he defends the policy, saying it kept millions of people out of poverty.
MARK WARNER: And I don't think we should just arbitrarily end it. I think we have to have some glide path or something that comes after.
JESSICA SMITH: Warner's idea is the Paycheck Security Act. The government would cover the cost of laid-off or furloughed workers' salaries up to $90,000 a year for businesses that have lost at least 15% of their revenue.
MARK WARNER: Rather than having this kind of mishmash of different initiatives, let's put in place a consistent program that will help small businesses, mid-sized businesses.
JESSICA SMITH: But the guaranteed paychecks would come with conditions. Businesses can't buy back stock, can't pay out dividends, and have to cap CEO pay.
As Congress decides what's next, Bernardo urges lawmakers to remember that $600 a week is more than a political debate.
DIANA BERNARDO: There are people in need who depend on that.
JESSICA SMITH: The extra $600 a week, the cutoff for those benefits is on July 31. But because of the payment schedules on the state systems, most people will stop getting them in about 10 days. Julie.
JULIE HYMAN: So, Jessica, when it comes to whether Congress can agree on whether to extend those benefits, perhaps offer that $450 supplement that we heard about, how much is the structure of the systems themselves part of the discussion? We heard a lot about bottlenecks early on, where people were not able to get the money that they needed.
JESSICA SMITH: Right. The outdated systems that are in each of these states is a big problem. It limits how creative lawmakers can be in coming up with the solutions, because the systems aren't sophisticated enough at the moment to crunch the numbers in each individual state for how much a person should get. That's why they chose the $600 flat rate across the board.
Lawmakers are working to change that. They are trying to get the states to update their systems. We did try to interview Secretary Scalia about this, the labor secretary, but we never heard back from the office.
JULIE HYMAN: Jessica Smith, in Washington, thank you so much. Appreciate it.