Senate bill would expand unemployment and pay $250 a week to gig workers

Senate Finance Committee Chairman Ron Wyden, D-Ore., Speaks at a Senate Finance Committee hearing on February 25, 2021 in the U.S. Capitol.

Tasos Katopodis | Getty Images News | Getty Images

A Senate bill introduced on Wednesday would largely reform the U.S. unemployment system and seek to close loopholes in the safety net for unemployed Americans in response to the Covid pandemic and make states more equal.

The legislation would increase the amount and duration of unemployment benefits and widen the pool of workers who are eligible for allowance.

It is sponsored by Sens. Ron Wyden, D-Ore., Chairman of the Finance Committee, and Michael Bennet, D-Colo.

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The bill, the Unemployment Insurance Modernization Act, would also make self-employed, gig workers, new graduates and others an integral part of the unemployment protection net.

Those workers, who are typically not eligible for state aid, are eligible for $ 250 weekly unemployment benefit paid by the federal government for up to six months and indexed annually for inflation.

During periods of high unemployment, the amount and duration can increase. Similarly, government benefits would respond more strongly to economic downturns and rising unemployment.

It does other optimizations as well. For example, states might not be denied job assistance to workers who are forced to leave their jobs for “compelling” reasons such as loss of childcare or unusual health or safety risks and irregular work schedules, which all came into play during the pandemic.

‘Defective’ system

“Our unemployment insurance system is broken and has been broken for decades,” said Wyden. “As we saw last year, it is much more difficult for the unemployment system to work in a crisis when it has been neglected and sabotaged.”

Millions of Americans turned to the program in record numbers a year ago as states took action to contain the coronavirus outbreak.

Legislators have taken unprecedented, albeit temporary, steps to increase the amount and duration of benefits through the CARES Act and other legislative sessions. For example, the unemployment support pandemic program offered help to millions of workers, including the self-employed, who would otherwise have raised nothing.

These [legislation] would reduce the differences between states and create a more stable ground for this benefit.

Andrew Stettner

Senior Fellow at the Century Foundation

However, it is unclear whether Republicans would support such a permanent expansion created in the 1930s during the Great Depression.

The US $ 1.9 trillion bailout plan, which extended support through Labor Day and increased it by $ 300 a week, didn’t get a single Republican vote. Critics of offering more unemployment benefits have argued that it could encourage people to stay home and hold back economic recovery.

According to the Ministry of Labor, more than 18 million people are still receiving benefits.

Differences in state

The experience of workers varies greatly between countries, which have a wide scope to determine their own unemployment rules and standards.

For example, according to the Department of Labor, Massachusetts paid the average worker in February, most of the state, $ 500 per week in welfare benefits. In contrast, Louisiana was paying the least $ 193 a week.

Workers in seven states also collect aid for less than six months, the typical duration, according to the Center for Budget and Policy Priorities. (Others raised her temporarily because of the pandemic.)

Differences between states are not necessarily related to the cost of living, experts said. Many states, particularly in the south, have cut taxes to finance unemployment benefits after the Great Recession and have cut aid as a result.

“There’s a big difference,” said Andrew Stettner, a senior fellow at the Century Foundation. “These [legislation] would reduce the differences between states and create a more stable ground for this benefit. “

The bill would oblige states to offer services for at least 26 weeks. The benefits would also replace 75% of a worker’s average early layoff wage (up from around half now) up to a state’s maximum weekly benefit.

The federal government would pay an additional $ 25 per week per dependent.

A state’s maximum weekly benefit would also increase to at least two-thirds of its average weekly wage.

For example, in Louisiana, benefits are currently capped at around $ 250 per week. According to an analysis of Labor Department data on the state’s median wages in the fourth quarter of 2020, legislation would more than double, to about $ 541.

The federal government would also fully replace lost wages for workers in public health emergencies or other major disasters.

Extended benefits

Employees currently receive extended benefits during periods of high unemployment.

Legislation would change the rules to trigger these expanded benefits more quickly during recessions and set a longer timeframe for this assistance, Stettner said.

Most states pay a maximum of 13 weeks of extended benefits; The bill would quadruple that to up to 52 additional weeks if the unemployment rate exceeds 8.5%.

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