The $600 federal bump in unemployment benefits will end a week earlier than expected for millions of Americans
The $600 federal boost to unemployment benefits will end before Friday, July 31, since states pay out the money on either Saturday or Sunday. That means the government initiative will end on either July 25 or July 26. Millions of people would get a drastic pay cut overnight if no replacement is in place, and Congress remains divided on how to move forward.
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For tens of millions of Americans relying on unemployment benefits to buy groceries or pay rent, the $600 federal bump in weekly payouts will end nearly a week sooner than expected. In March, Congress and President Donald Trump passed the CARES Act, which provided a boost to unemployment benefits until "on or before" July 31. But given state unemployment systems set their weekly end dates on either Saturday or Sunday, the government measure that's financially cushioning people is expected to expire before the end of next month. "The (Federal Pandemic Unemployment Compensation) $600 can be paid for weeks ending no later than the week ending prior to Friday, July 31, 2020,'' the US Department of Labor said in a statement to USA Today, which first reported the news. "For all states except (New York), that is Saturday, July 25th. New York's end date is Sunday, July 26th." That heightens the prospect that without a replacement, jobless people's incomes could fall dramatically depending on their state. That pay cut would range from around 50% to 75% "overnight," per economist Ernie Tedeschi of Evercore ISI.
Come July 31, if the emergency UI top-up isn't extended, unemployed workers will effectively get a pay cut of 50-75% overnight.It's increasingly looking like there won't be enough labor demand to hire them all back at that point. https://t.co/bfZ7CJRMgq pic.twitter.com/XPBWo69Kah — Ernie Tedeschi (@ernietedeschi) May 19, 2020
"It's going to be a real shock to people, especially in states like Arizona, where the maximum benefit is $240 a week," Michele Evermore, policy analyst at the National Employment Law Project, told CNBC. Roughly 33 million people are collecting the benefits or waiting for their applications to be processed, according to data from the Labor Department. The agency reported last year that the average weekly benefit to a jobless worker was $378. Read more: Jefferies says buy these 14 cheap stocks that are financially strong and positioned for market-beating returns Republicans and Democrats in Congress are bitterly divided on extending unemployment benefits. Democrats are seeking to extend the $600 federal boost through January of next year. But Republicans argue it disincentivizes work since it allows people to earn more from the government than they did at their old jobs. GOP Senate Majority Leader Mitch McConnell called it "a crazy policy" last month during a call with House Republicans, Politico reported. Recently, a study from researchers at the University of Chicago and University of Notre Dame indicated that the $600 boost in weekly unemployment payouts helped lower poverty rates in March and April, even as the US underwent its worst economic calamity since the Great Depression due to the pandemic.Join the conversation about this story » NOW WATCH: How waste is dealt with on the world's largest cruise ship
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