Federal Unemployment Benefits Expire, State Funds Running Low

Jul 30, 2020

As Congress debates a fifth coronavirus relief package and the future of the $600-per-week federal unemployment benefit that’s set to expire at the end of the month, Gov. John Bel Edwards said the lower amount proposed by Senate Republicans is not enough to support individuals thrown out of work by the coronavirus.

Nearly 80 percent of the $4.9 billion in unemployment benefits paid out by the Louisiana Workforce Commission in the last five months was the direct result of the federal government’s first coronavirus relief package – the $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act.

In addition to providing a $600 boost to unemployed workers’ weekly benefits, the legislation lengthened the amount of time people can receive unemployment benefits and extended eligibility for assistance to gig workers and people who are self-employed.

Critics of the payments say the extra $600 from the federal government on top of weekly state unemployment benefits is often more money than many low-wage workers made when they had jobs. Supporters say they are a “critical lifeline,” putting food on the tables and keeping roofs over the heads of unemployed Louisianans.

Under the GOP’s latest plan, unemployed workers would receive a $200-per-week federal benefit that would eventually be replaced by an individualized payment amounting to 70 percent of their previous wages.

Congressional Democrats are pushing to extend the $600 payments through the end of the year.

Edwards stopped short of endorsing his fellow Democrats’ proposal, but said the $200 favored by Republicans is too low, and tailored payments would be a logistical nightmare for the state’s unemployment office.

“It’s not just the state of Louisiana,” Edwards said during his Tuesday coronavirus briefing. “I’m not aware of any state unemployment system where we can handle variable unemployment amounts based on what the employee’s earnings were in the previous year. They’re just not designed to function that way.”

A surge of tens of thousands of unemployment claims overwhelmed the Louisiana Workforce Commission’s antiquated online application portal in the early days of the outbreak.

If Congress doesn’t pass another relief bill that addresses unemployment assistance by the end of the week, out-of-work Louisianans will have to get by on their state benefits alone. At an average of $212, Louisiana’s weekly payments are among the lowest in the country.

And Edwards warned that the pot of money used to pay those state benefits, is getting dangerously low. He sent a letter to the members of Louisiana’s congressional delegation requesting that any additional COVID-19 relief legislation include money to replenish the state’s Unemployment Insurance Trust Fund.

Last fall, the balance in the fund was more than $1 billion, but after this year’s unprecedented unemployment rates and demand for assistance, only $350 million remains.

To insure the solvency of the fund, the state automatically hikes payroll taxes if the balance dips below certain thresholds.

“This is obviously not a good time to be imposing any additional taxes or surcharges on employers and their payroll,” Edwards said.

The steepest increases kick in if the balance falls below $100 million.

Edwards says without federal assistance, the fund could reach that point by early September, and the state would have to take out costly loans to keep paying weekly unemployment benefits.

While Edwards has expressed concern about maintaining state benefits, advocacy groups have zeroed in on protecting the $600 weekly payments.

Power Coalition for Equity and Justice, a New Orleans based non-profit organization that advocates for low income individuals, says eliminating or reducing the weekly federal payments would “sever a critical lifeline” for Louisiana workers and families.

They along with several other organizations have called for protests Thursday at the regional offices of Senators Bill Cassidy and John Kennedy to demand the extension of the federal unemployment benefits.