Most unemployed workers will get up to $1,800 in extra jobless benefits through the Lost Wages Assistance program created last month by the Trump administration.
The program pays a $300-a-week federal subsidy on top of the unemployment benefits workers currently receive. It follows the lapse of a $600 weekly supplement in late July.
States, which had to apply and be approved for the Lost Wages aid, will issue up to six weeks of payments to eligible workers, a spokeswoman for the Federal Emergency Management Agency, which is overseeing the program, said Thursday.
“States should plan to make payments to eligible claimants for no more than six weeks from the week ending Aug. 1, 2020,” according to the spokeswoman.
$2,400 in some states
That equates to a maximum $1,800 — or three weeks’ worth of the prior $600-a-week subsidy, which was enacted by the CARES Act coronavirus relief law in March.
Some states, like Kentucky, Montana and West Virginia, are kicking in an extra $100, for a total of $400 per week. Workers in these states would get up to $2,400 total over the six weeks through the Lost Wages program.
There had previously been questions as to how long unemployed workers would receive the subsidy — and therefore how much money they would get.
The answer is consequential for the nearly 30 million Americans who are collecting unemployment benefits, many of whom haven’t received federal aid for about a month and a half.
The White House diverted a finite amount of money toward the Lost Wages measure — up to $44 billion in federal disaster-relief funding. Federal officials estimated that pot would last about five weeks.
But other factors, like the number of participating states and workers, made the outcome uncertain. The program would have also ended early if the balance of unobligated money in the disaster-relief fund dipped below $25 billion.
FEMA limited the duration to six weeks “based on state and [Department of Labor] projections and current state spending rates,” according to the spokeswoman.
Forty-eight states, plus Washington, D.C., and Guam, have gotten approval to offer the $300 payments. FEMA has distributed $30 billion to these states and territories so far, the spokeswoman said. They received initial approval for three weeks of assistance and must apply for the additional three weeks.
Fewer than half of the approved states have begun processing and disbursing payments to eligible workers. Some have indicated they don’t expect to start issuing the subsidy until late September or into October.
“Regardless of where the states and territories are in their process to receive and distribute the FEMA funding, FEMA will fund six weeks in $300 supplemental unemployment benefits to every state and territory that has applied for this assistance by Sept. 10,” according to the agency spokeswoman.
While the agency is no longer accepting initial applications, states and territories can still submit requests for additional weeks if they applied by the original deadline, she said.
Because six weeks have already passed since the week ended Aug. 1, unemployed workers may receive just one lump-sum payment, though it depends on how each state administers the benefit.
Workers must certify that they’re unemployed or partially unemployed due to disruptions from Covid-19 to be eligible for the payments. They must also currently receive more than $100 a week in benefits.
Consumer spending may fall
Without a federal enhancement, the average worker would have gotten $306 a week in July, according to Labor Department data. Some states paid much less. Mississippi and Louisiana, for example, paid around $180 a week.
The prior $600 weekly supplement to unemployment benefits propped up consumer spending (and, by extension, the U.S. economy) in the first months of the coronavirus pandemic, research shows.
The supplement allowed three-quarters of workers eligible for unemployment benefits to at least fully replace their lost wages, with the typical worker getting 145% of prior pay, according to an analysis by University of Chicago economists that looked at the period between April and July.
It was especially helpful for lower earners, who lost their jobs to a greater degree than higher-income workers.
A large reduction in benefits would have a “quite substantial” impact on consumer spending, according to a paper published last month by the National Bureau of Economic Research.
Consumer spending at the local level was estimated to drop about 44% after the $600 subsidy lapsed in July, economists found in that study.
It would fall by 28% if the supplement were reduced to $200 a week, and by 12% if reduced to $400, they estimated.