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States Start Cutting Slimmer Checks After Jobless Aid Boost End

Aug. 4, 2020, 5:35 PM

States that struggled for months to meet the surge in demand for unemployment benefits are discovering that they’re well-equipped to stop paying more than 20 million Americans the extra $600 per week in federal aid that expired last week.

At the same time, many laid-off workers who’ve been drawing weekly jobless benefits will start discovering Tuesday that their direct deposits or mailed checks are $600 lighter—down to a national weekly average of $320 compared with the $920 average before Congress allowed the program to expire. Some may not see that change reflected in their bank accounts until later this week, depending on claimant preferences and other state-by-state variances, according to responses from eight state agencies.

Federal funding for enhanced insurance—called Federal Pandemic Unemployment Compensation, or FPUC—lapsed Aug. 1, and negotiations between Democratic lawmakers and White House officials on a new relief package drag on. Major differences remain on how to extend the extra payments, with Democrats calling for a renewal of the $600 supplement through January 2021 and Republicans offering a variety of less-generous alternatives.

Workers across the U.S. began filing their weekly certifications for unemployment Sunday, the first possible day. Those who got an early start by certifying Sunday will have begun receiving their downsized checks Monday through Wednesday in Arizona, while in North Carolina and Missouri, they’ll begin seeing slashed benefits Tuesday, according to spokespeople for state unemployment offices. Most Oregonians will notice the diminished funds Wednesday, said David Gerstenfeld, acting director of the Oregon Employment Department.

“The expiration will not directly impact our processing of claims, other than an increased urgency among people relying on those benefits which we anticipate resulting in more people needing to call or otherwise contact us,” said Gerstenfeld via email.

Despite all the delays and challenges booting up unemployment systems last spring to handle the massive coverage expansion in the March CARES Act, state workforce agencies say they’ve had a seamless transition turning off the spigot on the $600 weekly supplement.

Pressure on lawmakers to forge a compromise will only intensify this week as more workers by the hour check their accounts and realize the regular state benefits without the $600 could prevent them from paying rent or meeting other basic family needs. Some likely didn’t know about the expiration and will be flooding state government offices with phone calls, said Dale Ziegler, a former deputy administrator of the U.S. Labor Department’s unemployment insurance office.

“Claimants will be anxious about the future and will want to know whether the CARES FPUC will be extended,” said Ziegler, who also used to oversee unemployment divisions in Maryland and Washington state. “Most states will have given them an alert it may end. Nevertheless, I would expect lots of busy signals and anger that should be directed to the Congress.”

Plea for Simple Fix

Some states paid the $600 supplement on the same day as the regular unemployment check—either as one merged deposit or two separate transactions.

Many states have been processing the spike in unemployment claims by relying on antiquated software systems and without sufficient staff. They struggled to efficiently pay benefits while simultaneously reprogramming their systems to start accepting applications from independent contractors under the new Pandemic Unemployment Assistance program.

Even with the end of the supplement, countless Americans still are owed for multiple weeks before the Aug. 1 deadline. States say that as they work out the backlog, they’ll continue to send out the supplements for those weeks.

“If a decision is made on a claim after July 25 and the claimant is owed benefits for any of the weeks ending April 4 through July 25, the benefits paid retroactively for those weeks will include the $600 FPUC benefit,” said Kerry McComber, spokeswoman for North Carolina’s Division of Employment Security.

States also are bracing for any extension Congress might include in an eventual bipartisan stimulus package. State unemployment officials made it clear that the GOP proposal to switch the supplement to a formula based on 70% of workers’ prior pay would take months to implement and that they’d prefer another flat supplement, whether that’s $600 or a lower fixed amount.

But states will need another week or two to get up to speed even with a return to a flat benefits plus-up. This could take on added complications if the extension entails retroactively paying enhanced compensation for weeks going back to the start of August.

“Being retroactive helps people more, but does make it more difficult to implement,” said Oregon’s Gerstenfeld. “Our best current estimate for implementing a change, if it is a flat dollar amount, is a few weeks.”

To contact the reporter on this story: Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Karl Hardy at khardy@bloomberglaw.com