President Biden proposed $1.9 trillion of funding in a third federal COVID-19 recovery effort. Twice the size of December’s bipartisan stimulus package, his first major legislative move could allow the government to continue providing extended and increased economic aid through the fall.
Under Biden’s proposal, unemployment insurance would be expanded to $400 weekly through the end of September 2021, the federal minimum wage would be more than doubled to $15 per hour, and $350 billion would be allocated to state and local governments. The package would also include direct payments of $1,400 to supplement the $600 checks currently making their way to many Americans.
Through the CARES Act in March, the federal government created two programs to supplement normal unemployment insurance. Pandemic Unemployment Assistance (PUA) constitutes $179 weekly payments for 39 weeks for self-employed workers, contractors, and gig workers not covered by traditional unemployment. 15,000 workers in D.C. currently receive or are seeking PUA according to Doni Crawford, a policy analyst at the D.C. Fiscal Policy Institute. Pandemic Emergency Unemployment Compensation (PEUC) is a 13-week extension of normal unemployment insurance, which lasts for 13 weeks and currently aids 26,000 D.C. workers.
[Read more: Here’s how to claim unemployment in the District]
December’s second federal stimulus package provided jobless D.C. residents with boosted unemployment aid to continue until mid-March.
Both PUA and PEUC were set to expire on Dec. 26. But after nearly nine months of debate over a second aid bill, Congress voted on Dec. 21 to extend the programs for 11 weeks.
The second relief bill increased the time that individuals can receive benefits to a maximum of 50 weeks, allowing workers who were about to exhaust their benefits to continue receiving them through March 13. It also added $300 to weekly unemployment benefits for all workers and an additional $100 each week to some self-employed and gig workers.
Tazra Mitchell, policy director at DCFPI noted that for D.C. residents receiving or seeking benefits as of Jan. 25, these programs are a lifeline. “Unemployment benefits are really important because they replace lost wages, so they provide a crucial economic stability to unemployed workers,” Mitchell said, adding that giving individuals more money can also spur the economy’s recovery. “Our lawmakers should be centering a people-focused economic recovery.”
But despite the increases provided by the December relief bill, many people are still receiving less than they did at the start of the pandemic.
“We know that the $600 dollars a week extra that the federal government gave their workers during the initial part of COVID really kept families afloat,” Mitchell said before the details of the December stimulus were released. “Anything short of that dollar amount, I think, would be unwise.”
In addition, claimants in the District continue to struggle to use an application system that has been widely criticized as inefficient. Applicants must navigate long wait times, an outdated online portal, and backlogged phone lines. Some D.C. residents have reported being unable to collect the full sum for which they are eligible, and D.C.’s complex system has caused other residents to miss opportunities for backpay, extended benefits, and PUA.
Furthermore, although the second relief bill was signed into law on Dec. 27, leaving no gap in funding for PUA and PEUC, brief payment delays were reported as local agencies awaited instruction from federal authorities in the Department of Labor.
Crawford also noted that “Black D.C. residents, primarily residing in Wards 7 and 8,” where unemployment remains highest, “continue to be hit the hardest” by the economic downturn.
The increased benefits, moreover, are temporary. They will last through March 13, at which point Congress will have to return to pass another bill, meaning workers only have another month of guaranteed benefits. “They shouldn’t have to keep coming back every three months to pass new [unemployment insurance] benefits increases,” Mitchell said. “Otherwise help is delayed.”
Local Unemployment Aid
While D.C. cannot run a deficit to provide aid the same way the federal government can, the District has taken a few steps to provide aid to workers.
On Dec. 7, Mayor Muriel Bowser announced the District would provide a one-time “local stimulus” check of $1200 to residents on PUA. Department of Employment Services (DOES) Director Unique Morris-Hughes noted that about half of the 40,000 PUA applicants at that time were D.C. residents, meaning that about 20,000 workers were eligible to receive the stimulus check. The first payments, which came from D.C.’s CARES Act funds, reached residents during the week of Dec. 15.
Some derided the one-time checks, which total $1000 after taxation, as an insufficient emergency measure. According to recent reporting, the combination of high unemployment rates, higher-than-usual healthcare bills, costly pandemic-related PPE, and typical credit card and grocery payments has left many D.C. residents struggling financially even with the support of stimulus payments. Biden’s proposed federal direct payments would bolster residents’ income, but are opposed by a crucial minority of lawmakers, leaving many worried about mounting bills.
Biden’s relief plan faces an uphill battle against spending-weary Republicans and Democrats and is likely to be tabled as former-President Trump’s second impeachment trial occupies Senate business for the first few weeks of the legislative session.
Unless Biden’s stimulus plan is passed, D.C. may have to borrow money from the federal government to keep paying out unemployment benefits. In order to bankroll unemployment insurance programs, employers pay taxes into an unemployment trust fund. At the beginning of 2020, D.C.’s trust fund had a balance of $521 million, which was drawn down to $100 million by the start of November. As of Jan. 25, its balance hovered near $39 million.
According to Mitchell, the trust fund’s solvency is at risk. Crawford added that without joining 21 jurisdictions in borrowing from the federal unemployment trust fund, the city’s fund could be depleted by March. Crawford said that the Mayor ordered DOES to begin that process in November; it is unclear when those funds will be dispatched.
As of early February, the District has depleted its unemployment trust fund, having drawn from its $521 million in reserves to fund unemployment insurance payments for jobless claimants. D.C. CFO Jeffrey DeWitt noted in his Feb 3 testimony in front of lawmakers that the District will now borrow federal dollars from the U.S. Treasury to bankroll these programs, joining several states in taking this emergency measure. The funds will be repaid to the federal government with interest.