States uncommitted to Trump’s unemployment boost

AP – United States (US) President Donald Trump’s plan to offer a stripped-down boost in unemployment benefits to millions of Americans amid the coronavirus outbreak has found little traction among the states, which would have to pay a quarter of the cost to deliver the maximum benefit.

An Associated Press survey found that as of Monday, 18 states have said they will take the federal grants allowing them to increase unemployment cheques by USD300 or USD400 a week. The AP tally showed that 30 states have said they’re still evaluating the offer or have not said whether they plan to accept the president’s slimmed-down benefits. Two have said no.

The uncertainty is putting some families’ finances in peril.

Tiana Chase, who runs a community game room and store in Maynard, Massachusetts, said the extra USD600 she and her partner had been receiving under the previous federal benefit helped keep them afloat after the pandemic caused many businesses to shutter.

For the past few weeks, she’s been getting less than USD300 in unemployment. If that’s boosted by another USD300, “it’s going to be a lot tighter, but at least I can vaguely manage,” she said. “I can cover my home expenses.”

Many governors say the costs to states to receive the bigger boost offered by Trump is more than their battered budgets can bear. They also say the federal government’s guidelines on how it will work are too murky. Pennsylvania Governor Tom Wolf, a Democrat, called it a “convoluted, temporary, half-baked concept (that) has left many states, including Pennsylvania, with more questions.”

A person looks inside the closed doors of the Pasadena Community Job Center in Pasadena, California, during the coronavirus outbreak. PHOTO: AP

New Mexico was the first state to apply for the aid last week and one of the first to be announced as a recipient by the Federal Emergency Management Agency. But Bill McCamley, secretary of the state’s Department of Workforce Solutions, said it’s not clear when the money will start going out, largely because the state needs to reprogramme benefit distribution systems to make it work.

“People need help and they need it right now,” McCamley said. “These dollars are so important, not only to the claimants, but because the claimants turn that money around, sometimes immediately to pay for things like rent, child care, utilities.”

In March, Congress approved a series of emergency changes to the nation’s unemployment insurance system, which is run by state governments.

People who were out of work got an extra federally funded USD600 a week, largely because the abrupt recession made finding another job so difficult. The boost expired at the end of July, and recipients have now gone without it for up to three weeks.

With Democrats, Republicans and Trump so far unable to agree to a broader new coronavirus relief plan, the president signed an executive order on August 8 to extend the added weekly benefit, but cut it to USD300 or USD400 a week, depending on which plan governors choose. States are required to chip in USD100 per claimant to be able to send out the higher amount, something few have agreed to do, according to the AP tally.

Trump’s executive order keeps the programme in place until late December, though it will be scrapped if Congress comes up with a different programme. It also will end early if the money for the programme is depleted, which is likely to happen within a few months.

Governors from both parties have been pushing for Congress to make a deal, even after previous talks for a sweeping new coronavirus relief bill, including an unemployment boost, broke off earlier this month.

When Congress finally reaches an agreement, “I have every reason to believe… there will be a more robust deal that is struck,” said Texas Governor Greg Abbott, a Republican who has been noncommittal about accepting Trump’s plan.

One reason for the states’ hesitancy is that they fear they will go through the complex steps required to adopt Trump’s plan, only to have it usurped by one from Congress, according to a spokeswoman for Republican Wyoming Governor Mark Gordon.

So far, most states that have said they are taking Trump up on his offer have chosen the USD300 version. Some have not decided which plan to take. In North Carolina, for instance, Democratic Governor Roy Cooper has pushed for the USD400 plan, but Republican lawmakers have not committed to kick in a share of state money for that.

Mississippi’s Republican Governor Tate Reeves has spurned the deal altogether, saying it’s too expensive.

State leaders who say they can’t afford to chip in point to the widespread closure of businesses, which has hammered government tax revenue. But they also acknowledge that they need the help, as a record number of claims have left their unemployment trust funds in rough shape.

Most states expect to exhaust their funds and need federal loans to keep paying benefits during the recession. So far, 10 states plus the US Virgin Islands have done so, including California, which has borrowed USD8.6 billion. Another eight states have received authorisation for loans but had not used them as of last week.

California Governor Gavin Newsom, a Democrat, is among governors who are critical of Trump’s approach but decided to take the deal anyway. “As I say, don’t look a gift horse in the mouth,” Newsom said last week.

The federal Department of Labor reported last week that 963,000 people applied for unemployment benefits for the first time. It was the first time since March that the number dropped below one million. The government says more than 28 million people are receiving some kind of unemployment benefit, although that figure includes some double counting as it combines counts from multiple programmes.

State unemployment benefits on their own generally fall far short of replacing a laid off worker’s previous income.

Chris Wade, who lives in the Chicago suburb of Schaumburg, is a server at a high-end restaurant. He was laid off in March when dine-in restaurants were closed in the state. While he’s since returned, he’s working only a few shifts a week and his unemployment cheques are reduced by the amount he’s paid.

The now-expired USD600 weekly unemployment supplement came out to about the same as his family’s rent, he said. When his first cheque came in April, he was eight days behind on rent, but with the help, he’s been able to keep paying since then.

“The extra money, no matter what they give me, is all going to rent anyway, or other bills,” said Wade, 45. “Every dollar actually counts.”