Unemployment benefits fall below poverty line in 13 states

Unemployment insurance benefits for Americans in 13 states fell below the poverty line after the additional $ 600 a week in federal aid expired at the end of July, according to a new report from the Government Accountability Office.

The $ 2.2 trillion CARES law that Congress passed in March increased unemployment assistance by $ 600 per week for laid-off workers.

When the $ 600 per week ended in July, the typical unemployment check fell back to an average of $ 330 per week. But in 13 states, the average weekly unemployment check has actually fallen to less than $ 245 – the minimum weekly income needed to live above the poverty line in the United States, the congressional watchdog reported.

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For months, Congress has been trying to pass another coronavirus relief deal, but lawmakers remain sharply divided over the size and scope of the legislation.

One of the main sticking points in the negotiations has been the amount of unemployment benefits: Democrats argue that $ 600 a week is needed to bridge the gap between unemployment assistance and median income, while Republicans have insisted it discouraged work, noting that around two-thirds of unemployed workers received more government assistance than they earned at their old jobs, according to an article by economists at the Becker Institute Friedman of the University of Chicago. Most economists dispute this notion.

In September, President Trump signed a series of executive orders, including one providing for an additional $ 300 per week in benefits for six weeks. The GAO noted that the money has since ceased.

The lack of federal funding and continued high unemployment have put a strain on states, 20 of which reported holding federal loans worth about $ 40.2 billion, the equivalent of what a larger group of states owed in the aftermath of the 2008 financial crisis.

“This total loan balance is roughly equal to the roughly $ 40.2 billion held by 30 states and territories at the end of 2010, the level of borrowing after the 18-month recession of 2007-2009 and the rapid recovery.” , indicates the report.

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Meanwhile, a program separate from the CARES Act – Pandemic Unemployment Assistance (PUA) – which was created for workers who are not generally eligible for benefits has been even worse: in 29 of 41 states who reported data, benefits fell below poverty levels.

When the PUA and another federal unemployment assistance program expire at the end of December, some 12 million workers will be left with no income, according to a study released by the Century Foundation, a nonprofit think tank.

Job losses remain high, and as COVID-19 cases increase across the country, prompting state and local governments to implement new lockdown measures, economists are increasingly warning against a dark winter.

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“There hasn’t been a greater need [stimulus] been here for a long, long time, ”Federal Reserve Chairman Jerome Powell said last week in his latest appeal to Congress and the White House for yet another stimulus package.