Additional unemployment benefits of $ 600 will end before July 31

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For the tens of millions of Americans receiving unemployment benefits, the extra $ 600 boost will run out sooner than expected.The weekly payments of $ 600 from the federal unemployment pandemic compensation program were introduced as part of the $ 2.2 trillion CARES law congress passed in late March amid the coronavirus pandemic. Americans who are eligible for unemployment insurance receive an additional $ 600 in addition to what they normally claim for state benefits. However, this boost should end “no later than July 31, 2020”.

July 31 falls on a Friday this year, which is a problem because states generally pay unemployment benefits on a weekly cycle that ends on Saturday or Sunday. And because of the wording of the CARES law, this means that states will end the additional payments of $ 600 on July 25 or 26, rather than the very last day of the month, depending on how the state’s weekly calendar is configured.

“If the benefit week ends after the July 31 deadline, then the $ 600 cannot apply to that week, and most benefit weeks end on Saturday or Sunday,” according to Michele Evermore, Senior Policy Analyst for the National Employment Law Project. Evermore added that she was unable to confirm any condition that ended her weekly benefit cycle on a Friday.

There are about 33 million Americans still receiving unemployment benefits or waiting to be approved, according to the Department of Labor. Thus, once the additional payments of $ 600 have ended, the unemployed American will be left with the unemployment compensation that their state generally pays, the amounts of which can vary considerably depending on the state. Last year, the Ministry of Labor reported that unemployment benefits had replaced about 45% of a worker’s wage nationwide.

In dollar terms, the Brookings Institution estimates that the national average weekly payment was $ 387 before the coronavirus pandemic. Mississippi, for example, paid an average of $ 215 per week, while unemployment benefits peaked at $ 240 per week in Arizona, which is the second lowest in the country. Meanwhile, those in Massachusetts received an average of $ 550 a week.

“This is going to be a real shock to people, especially in states like Arizona, where the maximum benefit is $ 240 a week,” said Evermore. “I doubt anyone can afford rent in Phoenix for that. “

Ending a $ 600 boost could have a “multiplier effect” on the economy

But it is not only those who are unemployed who will be affected. “I think most people think that when the $ 600 is cut, if they are not unemployed, it will not affect them. But when 30 million people no longer earn an additional $ 600, it will have a multiplier effect on the overall economy, “says Evermore.In fact, in a recent congressional economist, Jason Furman estimated that the additional unemployment benefit of $ 600 would boost GDP by 2.8% and support just under three million jobs.

“Let this additional $ 600 of unemployment insurance benefits expire at the end of July by himself cause more job losses than any of the recessions of the early 1990s or early 2000s, “wrote Josh Bivens, director of research at the Economic Policy Institute .

Going forward, Bivens predicts that extending unemployment benefits by $ 600 until the middle of next year would result in an average quarterly GDP increase of 3.7% and employment for 5.1 million workers.

The widespread impact of rising unemployment is likely to push federal legislators to extend benefits, says Evermore. “He went from an” if “question to a” how much “question. I think most people realize that you can’t just withdraw $ 600 from the weekly benefits of 30 million people and that nothing is happening, “says Evermore. But that means that Congress will have to act de facto since the Senate is not expected to return from vacation before July 17.

“There is actually a reasonable probability that this will happen simply because the economy is really fairly stable at the moment. Mocking too much could be really disastrous, ”says Evermore.

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