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Coronavirus bill boosts unemployment benefits, covers gig workers

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People waiting in line at an unemployment office.

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A coronavirus relief bill unveiled Tuesday would significantly expand unemployment benefits for Americans who lose their jobs due to the country’s recent economic contagion. 

The measure would beef up the nation’s unemployment insurance program, a state-administered program that provides temporary income support for out-of-work Americans. Final language could change before the bill’s scheduled release later today, though experts don’t expect it will relative to unemployment.

Under the legislation, unemployed workers would both collect bigger unemployment checks — which could, in some cases, even exceed their typical wages — and receive those payments over a longer period of time.

The legislation would also extend benefits to a broader pool of people, like gig workers and freelancers.

In some ways, the new provisions would eclipse similar actions the federal government took during the Great Recession a little over a decade ago, experts said. That recession was the country’s deepest since the Great Depression. 

“It would represent a significant expansion over what is currently available,” Susan Houseman, vice president and director of research at the W. E. Upjohn Institute for Employment Research, said of the legislation. 

The bill

The bill would offer jobless Americans $600 a week and pay 13 weeks of unemployment benefits, according to draft language of the Coronavirus Aid, Relief and Economic Security Act.

These provisions would be in addition to any benefits currently offered by a worker’s state, which administer their own unemployment insurance programs.

Workers are eligible for up to 39 weeks — around 10 months — of total federal and state benefits.

Benefits vary widely by state, which generally base payments on a worker’s prior four quarters of wages. Most states currently offer a maximum of 26 weeks of benefits. In January, state programs paid an average $385 weekly to unemployed workers, according to the Center on Budget and Policy Priorities.

The [unemployment] numbers could be much higher than they’ve ever been before.

Stephen Wandner

labor economist with the W.E. Upjohn Institute for Employment Research

Unemployed workers who wouldn’t typically qualify for state benefits would receive 50% of their state’s average benefits plus $600 a week, said Arindrajit Dube, an economics professor at the University of Massachusetts Amherst.

This category includes self-employed workers (such as those in the gig economy), those seeking part-time work, workers who quit their job or can’t reach their place of work as a result of COVID-19, or don’t have sufficient work history to otherwise qualify for benefits. 

It’s conceivable that, under the legislative proposal, unemployment could ultimately pay some individuals more money than their previous paycheck, experts said.

Americans who can telework with pay and individuals receiving paid sick leave or other paid leave benefits don’t qualify for expanded unemployment benefits. 

Expanded benefits would last through December 2020. 

30% unemployment

The boost in unemployment benefits comes amid mounting evidence of a looming U.S. recession, as businesses across the country have had to close, lay off workers, or reduce their hours. 

First-time claims for unemployment increased 33% last week, to 281,000, according to national figures released Thursday by the Labor Department. The agency attributed the increase to the COVID-19 virus. Economists expect a dramatic jump in claims when the Labor Department issues updated figures this week. 

James Bullard, president of the Federal Reserve Bank of St. Louis, said this week that the U.S. unemployment rate could hit 30% in the second quarter — higher than during the Great Depression and about triple that of the Great Recession. 

Such an increase would be a dramatic turnaround from an unemployment rate that had been hovering around 3.5%, its lowest level in a half century

A 30% unemployment rate would equate to roughly 45 million Americans, said Stephen Wandner, a labor economist with the W.E. Upjohn Institute for Employment Research and senior fellow at the National Academy of Social Insurance.

“We’ve never had anything like that,” Wandner said. “The numbers could be much higher than they’ve ever been before.”

Unemployment insurance

The unemployment insurance program was created in 1935 under the Social Security Act as a way to provide temporary income support for workers who lose their jobs.

An extra $600 in weekly checks would be a “formidable increase” in benefits, according to Gary Burtless, an economist and senior fellow at the Brookings Institution.

An extra $600 from the federal government would be a 156% increase in the nationwide average of weekly state payments.

During the Great Recession, the federal government only paid an additional $25 a week (the rough equivalent of $30 today), Burtless said.

“This is a new development in unemployment benefits. The program has never been that generous in terms of weekly benefits,” he said.

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By comparison, legislation passed during the Great Recession allowed unemployed workers in many states to collect up to 99 weeks — around two years — of benefits, Burtless said. That’s far more than the maximum 39 weeks of unemployment offered under the new legislation, he said. 

Expanding benefits to gig workers is also a significant change in current law, experts said.

Workers in the gig economy — contractors who drive for Uber and Lyft, for example — aren’t currently eligible to collect unemployment benefits since their employers don’t pay the taxes that fund unemployment insurance.

This is a developing story. Check back for updates.

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What Gig Workers Need To Know About Collecting Unemployment – WAMU 88.5

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When Will Illinois Gig Workers Get Unemployment Checks

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Gig workers and other self-employed, independent contractors in Illinois cannot look forward to getting unemployment checks anytime soon — despite a new federal law intended to help them out financially.

The $2 trillion federal stimulus bill that was approved on March 27 cleared the way to expand jobless benefits to many workers who had not previously been eligible, including the vast ranks of drivers for Uber, Lyft and other rideshare apps.

But nearly two weeks later, the officials who run the unemployment system for Illinois have not come up with a process to accept applications from such workers, much less get the promised money into their pockets.

The Illinois Department of Employment Security says it’s still too busy dealing with the record number of unemployment claims from other workers who are eligible for benefits under existing programs.

In a statement posted Tuesday on the department’s website, officials told gig workers not to bother applying at this point — and to refrain from calling to ask about the matter.

The new Coronavirus Aid, Relief, and Economic Security (CARES) Act sets aside federal funding for benefits to “independent contractors and self-proprietors” who once could not get benefits “but have become unemployed as a direct result of COVID-19,” officials said.

It’s not clear, though, when the state unemployment agency will be ready to start turning the funding from Congress into reality in Illinois. The U.S. Labor Department issued instructions to states on Sunday.

“Please do not call to inquire about these new federal programs,” according to the statement on the IDES website. “Our employees are processing applications for current benefits. Further details about the new federal programs and how to apply will be made available once they have been finalized.”

In a statement to WBEZ on Wednesday, a spokeswoman for IDES did not say how long the delay will last.

“The stimulus package will take time to implement,” said spokeswoman Rebecca Cisco.

She said state employees are fully occupied trying to field the “large increase in claims for regular unemployment benefits” since a stay-at-home order went into effect on March 20. Last week, for the second straight week, Illinois officials reported fielding a record number of new jobless claims.

It’s yet another blow to many working people who were having trouble making ends meet even before the pandemic, said Lenny Sanchez, a long-time Uber and Lyft driver who lives in Des Plaines.

“It’s a punch in the gut when you hear information like that or a response like that,” said Sanchez, 40, of the statement from IDES officials. “It’s like, ‘Hang on tight. We’ll give it to you whenever it’s ready.’ ”

Sanchez — who’s also an organizer and co-founder with an activist group called Gig Workers Matter — said many rideshare drivers were euphoric when the federal law was approved.

“Some drivers went ahead and started applying as soon as the news came out,” he said. “I’m definitely happy that gig workers were included.”

But he and other advocates for rideshare drivers said tens of thousands of families are suffering deeply because the new system has not been implemented yet in Illinois.

“Rideshare drivers are desperate right now, and they are scrambling to pay bills, pay mortgages,” said Bryant Greening, a lawyer with the LegalRideshare LLC. “It’s really a devastating and trying time for them.”

And it’s not just rideshare drivers who are eager to see the state get their unemployment checks in the mail.

Morgan Ione Yeager, a freelance photographer in Highland Park, said she was “appalled and disgusted” by the delays in implementing the aspects of the CARES Act designed expressly for workers like her.

“They’re really handling it poorly,” she said of the state’s response. “There’s no reason why it needs to be this difficult.”

Yeager said she has lost a lot of jobs with clients in the food, beverage, travel and hospitality industries after the pandemic prompted Illinois Gov. JB Pritzker and the governors of most other states to issue stay-at-home orders.

“All of my shoots have been cancelled for March and April at least,” she said. “I don’t really know when I’ll be able to start making money again.”

She said Illinois officials here should at least be able to provide some idea of when everybody covered by the federal stimulus bill will get what they were promised.

“There’s no timeline,” Yeager said. “There’s just no answers and no communication. It doesn’t seem like anybody in my situation is being taken care of at all.”

Dan Mihalopoulos is a reporter on WBEZ’s Government & Politics Team.

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Gig and contract workers can apply for Georgia benefits Monday

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Georgia state officials said Wednesday that their systems will be ready next week: gig and contract workers as well as the self-employed can start applying for jobless benefits starting Monday.

Those workers – tens of thousands of them without paychecks since the virus-linked shutdowns began several weeks ago – have been told not to apply yet, even though they are now entitled to jobless benefits.

Gig, contractor and self-employed workers were not covered by unemployment insurance in virtually any state before passage of the huge federal spending bill March 27.

Many rushed to apply for benefit. 

But state systems were not prepared. Many of those newly-eligible workers were unable to apply at all or if they were, they were frustrated to find their applications rejected.

Meanwhile, the extension of benefits to those new classes of workers sent state officials across the country scrambling to reconfigure software and other processes.

At least in Georgia, the system will be ready to handle applications – starting Monday, said Kersha Cartwright, spokeswoman for the state Department of Labor

Workers who had already applied do not have to apply again, she said. 

Once an application is processed, it could still be several weeks before the worker receives his or her money. When the payments begin, workers will receive $600 extra as part of the new law.

Also urged to file applications next week are workers who had previously been told their work history or limited wages made them ineligible. They should also apply starting Monday, Cartwright said. “If you have been told you had a limited work history or you don’t have enough wages, you may qualify for the Pandemic Unemployment Assistance program.”

Even without the contractors and gig workers, the Labor Department has been inundated with claims for jobless benefits. Last week, the department reported it had processed 133,820 applications for unemployment insurance – three times more than the worst week of the Great Recession. This week’s report, due Thursday, is expected to be worse.