Daily Labor Report®

GOP Jobless-Aid Proposal Gives States Option for More Run-Time

July 27, 2020, 9:56 PM

The Senate GOP plan to replace the across-the-board unemployment supplement with a more complex model linked to a person’s prior wages would give states two months to adjust their processing systems, but also include an option to apply for more time.

The GOP proposal unveiled Monday would slash the $600 weekly benefits boost to $200 per week for two months, giving states a cushion as they transition to meet a mandate to replace 70% of workers’ prior wages. States that aren’t ready to launch the individualized model after two months would be able to apply to the labor secretary for a waiver granting them two additional months of lead-time, according to text of the bill from Senate Finance Committee Chairman Chuck Grassley (R-Iowa).

Republicans designed the two-step proposal to encourage people to return to work, given that the expanded $600 weekly benefit Congress provided in late March pays many workers more than they were earning before the pandemic squeezed them out of a job. But Democrats have dug in ahead of formal virus-relief talks in support of extending the $600 weekly supplement through Jan. 31, 2021.

The proposal to replace lost wages would be based on weekly payments capped at $500 that, when combined with regular state unemployment compensation, equal 70% of each worker’s prior earnings. All states currently offer close to 50% wage replacement, though the exact method varies.

State workforce agencies advised Congress through a nonpartisan trade association that a flat supplement would be more feasible to implement than the type of varying formula Republicans envision. States estimated they would need four to 12 weeks or more to reprogram their systems to handle a wage-replacement model.

The waiver option in the Republican plan could help ease the transition for some states by giving them until Dec. 1 to ready their systems, but the more complicated model would still be a challenge for state agencies. It would require them to track down wage documentation that often isn’t readily available, particularly for self-employed workers taking part in the new Pandemic Unemployment Assistance program. It also could create more confusion for benefits recipients and increase call volume at already-burdened state unemployment offices.

Forging a compromise on enhanced unemployment insurance is one of the chief sticking points as negotiators move toward formal talks on a larger stimulus bill. There’s pressure on lawmakers to extend some form of a financial cushion on top of regular unemployment compensation, as the $600 supplement began expiring over the weekend.

Grassley’s bill also would mandate that states notify all unemployment insurance recipients about relevant state law on requiring individuals to accept suitable return-to-work offers and any state law covering the rights of workers to refuse such offers.

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