After months of uncertainty about unemployment pay and whether the $600 supplemental federal benefit would be extended, Michigan claimants learned last week that they may be eligible to receive an extra $300.
The announcement was met with both relief and confusion by unemployment recipients and economists.
“I find this all odd and complex,” said Michele Evermore, senior policy analyst of the Washington, D.C., nonprofit National Employment Law Project.
That’s because funding for the supplemental benefit comes from the Federal Emergency Management Agency (FEMA) and is made available through an executive order signed by President Donald Trump. Trump made the money available after Congress failed to agree on a new coronavirus stimulus package.
The $300 weekly benefit will be retroactive to Aug. 1. Beyond that, many details are unknown, such as when claimants will start receiving the funds, who is eligible and how long they’ll last.
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The implementation of the benefits could take longer than three weeks, said Jason Moon, a spokesman for the Michigan Unemployment Insurance Agency. The three-week timeline comes from the White House, he said, but based on conversations with other states that are implementing the program, it could take longer. He said the agency is doing everything possible to shorten that timeline.
Benefit offers relief
One aspect of the program most claimants and economists are sure about: Extra benefits are needed.
“The fact is Michigan has lost a lot of jobs,” said Mike McWilliams, an economic forecasting specialist at the University of Michigan. “Although the unemployment rate has improved more quickly than expected, it’s still at 9% and that’s really high. People who lost their jobs need all the help they can get.”
McWilliams said unemployed workers in Michigan spent 73 cents per dollar they received in benefits this year. Michigan residents are expected to receive $3 billion in extra income if the $300 in supplemental benefits is extended for the rest of the year.
“This is why consumer spending has held up in Michigan,” he said. “That spending has kept Michigan’s economy going.”
The $300 benefit could have been higher. Under the program, states can increase the weekly supplement to $400, by paying an extra $100 a week in state funds. Michigan, like many states, opted not to do this, citing an ongoing budget crunch.
Susan Houseman, a labor economist and vice president of Upjohn Institute for Employment Research in Kalamazoo, is not surprised because of the state’s fiscal situation. Still, while “the benefits are less generous, they are not anything to sneeze at.”
“It’s not a trivial sum for low-wage workers,” she said.
But not everyone thinks it’s enough
For some workers who were already receiving less money in unemployment benefits compared with their earnings before the pandemic, the $300 extra unemployment benefit caused both relief and disappointment.
Ken Leland, who owns a recruiting business in Grand Rapids, said he’s glad to know the federal benefit “is not nothing,” but wishes the government was providing more money.
Leland’s business operates by word of mouth and in-person meetings with clients — he doesn’t have an online presence. The pandemic has caused hiring to slow and people to stay home, leading to a decline in income for Leland.
Typically he wouldn’t receive unemployment benefits, but he was able to get Pandemic Unemployment Assistance benefits that cover self-employed workers. He used the $150 in state benefits along with the $600 in federal benefits to cover his mortgage payments, food and medical bills.
“I was able to keep my standard of living,” Leland, 62, said. “I can’t do that now” without the extra $600 in unemployment benefits.
The $300 will offer him some cushion, he said. “It provides some assurance.”
And it may not last
Not all claimants like Leland are eligible for the benefit, however. Filers must receive at least $100 in weekly unemployment benefit payments to be eligible for the federal money.
Evermore estimates about 1 million Michigan residents will be eligible, the vast majority of claimants, but still, some will be left out.
Even if a claimant does receive the benefit, it may not last long.
McWilliams thinks the money could run out as soon as September.
“There’s already uncertainty in the fall with students going back to school and people are worried about new coronavirus outbreaks and what will that mean,” he said. “All of that uncertainty means people will be cautious, but they have expenses and bills to cover.”
Trump’s executive order caps spending on the program at $44 billion. That money comes from the same pot used to provide relief in disasters, like Hurricane Laura, which hit parts of Louisiana on Thursday and left a wide path of destruction, Evermore noted.
“States may find that just as they get this up and running, they may run out of money,” she said.
It is still possible that Congress could revive the original $600 unemployment benefit, or a lesser amount, or appropriate more money to the $300 weekly replacement benefit.
McWilliams is optimistic a deal could get passed in September that would extend through the end of the year.
Matt Roling, executive director of the Office of Business Innovation at Wayne State University, is hopeful that it’s for the full $600.
“The federal benefit did what it was supposed to do,” Roling said. “People could go about (their) lives while not having to be at work and spread the virus. We’re taking that away but we haven’t solved the underlying problem.”
He said anything less than the $600 weekly benefit could have a serious, detrimental impact to the average American household budget.
“Unless the virus goes away, they are going to have to come up with something else,” said Roling. “This is a car that’s about to drive off the cliff.”
Contact Adrienne Roberts: firstname.lastname@example.org.