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Punching In: Jobless-Aid Fix Headed to the Negotiating Table (1)

July 27, 2020, 9:15 AM; Updated: July 27, 2020, 12:34 PM

Monday morning musings for workplace watchers

GOP Plan to Kick Off Stimulus Talks | House Democrats Push on Child Care

Ben Penn: This was supposed to be the week of decision on virus relief, but even Senate Majority Leader Mitch McConnell said a final deal on the next round of stimulus could be weeks away.

Senate Republicans and the administration are slated to bounce back from last week’s internal discord and release their counteroffer Monday, setting up the first meaningful bipartisan negotiations on a new virus-relief package—legislation the White House’s chief negotiator, Treasury Secretary Steven Mnuchin, wanted Congress to pass before month’s end.

There are big partisan differences over enhanced unemployment benefits and liability protections for businesses, and increasingly pressing questions over paid leave and child-care coverage complicate talks.

The GOP’s opening bid will call for expanded unemployment insurance under a formula designed to replace about 70% of each worker’s past earnings, White House Chief of Staff Mark Meadows and Mnuchin said in separate TV appearances Sunday. Early signs heading into the weekend indicated GOP leaders and the White House were considering pairing wage replacement with a short-term extension of the jobless aid supplement at a flat level (likely below the $600 boost that expired over the weekend).

But a question worth pondering is how will Republicans sell an individualized formula? Democrats have several reasons to stand firm on their bid to maintain the $600 weekly supplement into 2021.

For starters, the Labor Department has raised concerns. DOL acknowledged just a few weeks ago it would be a “heavy lift” for states to reprogram benefits-processing systems to accommodate a wage-replacement model. And as recently as mid-May the department told House Ways and Means Committee Democrats it “strongly opposes” extending the supplement through a calculation based on workers’ past wages.

DOL declined to stake out a position when I asked if its May 15 guidance still reflects the department’s view on Federal Pandemic Unemployment Compensation supplements: “Given the wide variety of FPUC modification proposals, the effects they will have on regular [unemployment compensation] and [Pandemic Unemployment Assistance] are also varied,” a DOL spokeswoman said in a statement. “The Department is working with States and policymakers to ensure shared understanding where necessary on potential implications.”

And then there are the numbers. The latest unemployment figures show initial claims nationwide are now on the rise for the first time since March, as Covid-19 cases continue to spike in some regions and businesses pause or reconsider reopening plans. That rise could help Democrats’ cause at the negotiating table. It certainly means an even greater challenge for state agencies in making timely benefits payments—not to mention updating their PUA programs in accordance with new DOL guidance and submitting detailed data downloads to comply with subpoenas from the DOL watchdog.

But there’s also real pressure from states. Democrats will surely point to nonpartisan concerns state workforce agencies have raised that any wage-replacement scheme would require significant run-time to implement. Unemployment officials from red and blue states alike have been huddling in recent days to express opposition to any plan that would require them to update their systems to anything other than a flat supplement.

The trade group for state workforce agencies relayed this sentiment directly to Capitol Hill, helping to boost Democrats’ leverage if Republicans dig in over a wage-replacement proposal.

Democrats, however, will have to find a way to counter Republicans’ complaint that the $600 weekly boost pays many unemployed workers more than they had earned in their last job. Republicans have been consistent in their messaging on this issue, emphasizing it again on Sunday’s political shows.

Jaclyn Diaz: Marker-bill action is upcoming in the House as Democrats move to stake a new position on aid to child-care providers.

The House is set to approve two child-care measures in coming days: the Child Care Is Essential Act (H.R. 7027) and the Child Care for Economic Recovery Act (H.R. 7327), both of which were fast-tracked to the floor.

The first would provide $50 billion in appropriations for the Child Care Stabilization Fund to award grants to child-care providers during and after the coronavirus emergency. The second would modify certain tax provisions to increase and make refundable the child and dependent care tax credit; it also would give employers payroll tax credits for certain fixed expenses of child-care facilities closed due to the virus. The votes, initially slated for Monday, were pushed back until later this week.

A gulf in top-line funding appears to be shaping up. Democrats called for $7 billion in child-care investments under the $3.5 trillion HEROES Act. Republicans were considering putting a $15 billion commitment for child-care aid on the table, per an early summary of the GOP draft proposal Bloomberg Law obtained last week.

Republicans as of last week were looking to disseminate the aid through a framework outlined under the Back to Work Child Care Grants Act of 2020, a proposal from Sens. Joni Ernst (R-Iowa) and Lamar Alexander (R-Tenn.), several sources with knowledge of early talks on Capitol Hill said.

The Ernst-Alexander plan would provide nine months of financial assistance for child-care providers, among other provisions, through Child Care and Development Block Grants.

Child-care industry leaders and advocates hope Congress can agree to a number north of $15 billion. They cite concerns parents across the country have raised about trouble finding available child-care options, a situation that complicates businesses’ return-to-work planning.

The child-care system would need at least $9.6 billion a month in public funding during the pandemic, according to an April report from the Center for Law and Social Policy, the National Women’s Law Center, and Aaron Sojourner, a former senior economist for labor at the Council of Economic Advisers. That level of funding is needed to provide emergency relief, avoid permanent closure of child-care centers, and to assist with additional operational costs stemming from social distancing and cleaning requirements.

We’re punching out. Daily Labor Report subscribers can check in during the week for updates. In the meantime, feel free to reach out to us. See you back here next Monday.

((Updated to reflect that House has rescheduled votes on two child-care bills.))

To contact the reporters on this story: Ben Penn in Washington at bpenn@bloomberglaw.com; Jaclyn Diaz in Washington at jdiaz@bloomberglaw.com

To contact the editors responsible for this story: John Lauinger at jlauinger@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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