Unemployment benefits shortened for more than 300,000 people amid pandemic: study
Outdoor dining tents under construction in Arlington, Va. On February 5, 2021.
Liu Jie / Xinhua via Getty
More than 300,000 Americans prematurely lost their unemployment benefits during the Covid pandemic, according to a study published Tuesday by the California Policy Lab.
This is due to a way many states count the unemployed, which underestimated the severity of the recession, according to the analysis.
Public unemployment systems have an automatic mechanism that pays additional assistance to the long-term unemployed during periods of mass unemployment.
These extended benefit programs can pay up to 20 additional weeks of assistance, in addition to the typical six months of regular state benefits.
But flawed design led 33 states to end their extended benefit programs since the fall of 2020, even as long-term unemployment continued to climb, according to the report.
Almost 315,000 people lost benefits as a result, according to a conservative estimate of the analysis.
“The pandemic has exposed flaws in the way these triggers are currently designed, which has led to the removal of automatic aid in many states when their workers experience increasing unemployment spells,” said Alex Bell, Thomas Hedin , Geoffrey Schnorr and Till von Wachter, who co-authored the report.
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States automatically pay additional aid based on the “insured unemployment rate”. (Some states use an alternative measure.)
The IUR is the share of a state’s workforce that receives unemployment benefits. It differs from a state’s unemployment rate.
Most states offer extended benefits when the insured unemployment rate exceeds 5%. All states except South Dakota paid for these benefits at some point during the pandemic.
However, the insured unemployment rate only counts Americans with regular public unemployment insurance.
It does not take into account long-term unemployed who receive assistance through extensions, such as the Extended Benefits program or any other federal program created by the CARES law. This means that it can “overestimate improvements in labor market conditions,” the co-authors wrote.
As a result, insured unemployment rates in many states fell below the 5% threshold, ending extended benefits in these areas.
In states like Alabama, Maryland, Minnesota, Ohio, South Carolina and Virginia, a large portion of people (about 20% to 30% of all workers receiving unemployment benefits) have lost for help after programs end, according to the California Policy Lab.
Only 16 states were still paying these benefits as of March 27, according to at the US Department of Labor.
However, ending prolonged aid in this way is counterintuitive during periods of long-term unemployment, say the authors of the report.
About 1 in 4 unemployed people in March had been out of work for at least a year, according to the Bureau of Labor Statistics.
“While several unique aspects of the Covid-19 crisis have exacerbated the problem – including high rates of long-term unemployment, a higher propensity of the unemployed to seek benefits, and high use of extended benefit programs – this design problem hinders the ability of UI programs to respond to any severe slowdowns, ”they wrote.
However, some people who were kicked out of extended benefits may have since been able to garner help through temporary federal programs. The American Rescue Plan has extended its assistance until Labor Day.
Michigan officials, which ended its extended benefit program on Saturday, said that was likely the case for its residents.
Fortunately, with the federal extensions that were implemented on March 27, claimants who were on the Extended Benefit Program will most likely be able to receive benefits under other federal programs such as Emergency Compensation in Case. pandemic unemployment or pandemic unemployment assistance, “said Liza Estlund Olson, interim director of the Michigan Unemployment Insurance Agency, mentionned.
About 613,000 of the roughly 17 million people receiving unemployment benefits were doing so through extended benefits at the end of March, according to the Ministry of Labor.