New Federal Unemployment Benefits Proposed in the HEALS Act

If you’ve lost your job due to the coronavirus crisis, your unemployment benefits are likely to decrease very soon.

It’s just a question of how much.

That will be decided the next two weeks as the Senate and House try to hammer out the differences in their relief bills.

Senate Majority Leader Mitch McConnell unveiled the Republican HEALS Act on Monday. The name is an acronym for Health, Economic Assistance, Liability and Schools.

There will be substantially less economic assistance to the unemployed in this coronavirus relief package.

Under the CARES Act passed in March, jobless Americans received $600 a week in federal payments on top of their state unemployment benefits. That stipend ended July 25, and under the HEALS Act it would resume at $200 a week.

That would be paid for two months, during which time states would transition their unemployment systems to replace the flat-rate supplement.
Instead, the federal government would provide money on top of state benefits so that workers would receive 70% of what they were making before losing their jobs.

Arriving at an accurate figure and implementing the program could be challenging. People who were paid hourly wages don’t always work the same amount of time per week, so a formula must be devised to determine what their average wage is.

And many states have outdated computer systems that will likely take more than two months to reprogram to meet the HEALS Act regulations.

The Senate bill sets up a battle with the Democratic-controlled House of Representatives, which earlier passed the HEROES Act. That stands for Health and Economic Recovery Omnibus Emergency Solutions.

In the dueling acronyms, HEROES wins the award for extravagance. It would spend $3 trillion, which would be on top of the $2.2 trillion already allocated under the CARES Act.

For a little perspective, if you stacked $5.2 trillion in $1 bills, the pile would be 352,903 miles high. That would reach to the moon and about halfway back to Earth.

To which many unemployed Americans might say, “I just want that $600 a week to keep reaching me until I get a job.”

Under the HEROES Act that federal supplement would continue through January 2021. Now that the Senate has unveiled its proposal, negotiations with the House can begin on a final bill.

The House of Representative goes on recess July 31 and the Senate is scheduled to leave town Aug. 7, so lawmakers have less than two weeks to come up with a final bill. Given the $2.2 trillion difference in total spending proposals and the mountainous philosophical differences, negotiations could get testy.

McConnell called the HEROES Act a “multi-trillion-dollar socialist manifesto.” Republicans say the $600-a-week federal supplement has acted as a disincentive for people to return to work.

Before the pandemic, state unemployment benefits on average paid about 45% of workers’ previous income. The $600 federal supplement pushed that “replacement rate” over 100 percent in much of the country.

The National Bureau of Economic Research said the median replacement rate under the CARES Act was 134%. Two-thirds of unemployed Americans were making more than they were when they had jobs.

About 20% were making twice as much not working than they were working. Even with a $400-a-week cut in federal benefits, the average replacement rate would still be higher than what unemployment paid before the pandemic.

“This is a much more responsible approach,” Senate Finance Chairman Charles Grassley, R-Iowa, said of the HEALS Act.

Senate Minority Leader Chuck Schumer, D-NY, did not see things that way.

“Republicans say take a 30 percent pay cut. Can you believe that?” he said. “You lost your job, can’t get to work, and now they want to take $1600 out of your pocket every month.”

Whatever compromise figure negotiators eventually agree on, it will probably be less than what unemployed Americans have been receiving. When clarity comes in a final bill, many will have to adjust their budgets.

With mounting bills, many might need financial advice. Nonprofit agencies have certified credit counselors that can set up budgets that will help people get through the unprecedented economic crisis.

By any acronym, millions of Americans need help.

“I hope this strong proposal will occasion a real response. Not partisan cheap shots,” McConnell said. “Not the predictable, tired, old rhetoric as though these were ordinary times and the nation could afford ordinary politics.”