$1,400 Stimulus Checks Are Small Potatoes: Democrats Have a Better Idea

U.S. Politics

$1,400 Stimulus Checks Are Small Potatoes: Democrats Have a Better Idea

The current unemployment system varies by each state and does not have a standardized minimum.

Key point: Enhanced unemployment insurance certainly did help many folks during the pandemic lockdowns. Could a new law help ensure future benefits are also robust during any other future big economic downturn?

A pair of Senate Democrats introduced a vast proposal that would remodel the country’s unemployment insurance system, working to spackle holes in the safety net programs for jobless Americans that uncovered during the coronavirus pandemic.

The new legislation, sponsored by Democratic Sens. Ron Wyden (Ore.) and Michael Bennet (Colo.), would standardize federal unemployment benefits and ensure that extra aid is added when the unemployment rate surges across the country.

The bill, the Unemployed Insurance Modernization Act, would require states to replace at least 75 percent of a claimant’s weekly wage up to the state’s maximum benefit rate, lasting a minimum of twenty-six weeks. The proposal would also boost jobless aid to be at least two-thirds of the state’s average weekly wage. 

“Unemployment programs are critical to helping workers stay afloat during difficult times—but too many workers still struggle to access their benefits in our patchwork of outdated state systems,” Wyden said in a statement. 

Currently, states have the ability to authorize how much is allocated for unemployment insurance and for how long, leaving broad disparities between states, as some unemployed Americans could see more aid than others in a different state. If the bill were to pass, however, the measure would raise jobless benefits in at least thirteen states in the United States, where the average weekly unemployment benefit is below the amount needed to avoid entering the 2020 poverty line. Weekly benefits in states can be as low as $235, as it is in Mississippi, and as high as $855, such as in Massachusetts.  

The legislation would also force states to offer twenty-six weeks of unemployment insurance, a standard that exists in most states, but a handful of them do not provide that same duration of aid.

“We dangled some incentives to states to make improvements, but few did,” Bennet said. “States turned around and cut the number of weeks and benefit replacement rates, leaving workers worse off. We just don’t want to see that happen again.” 

The Democratic bill from Wyden and Bennet could also tie unemployment insurance to national economic indicators, including the country’s unemployment rate, a measure that holds widespread support among party members. Economic or health-related crises could push higher aid for Americans or as much as fifty-two weeks of extended jobless insurance if the legislation becomes law. 

“This proposal will protect workers by strengthening and expanding benefits, modernize UI infrastructure with needed technology investments, and prepare us for the future by tying benefits to economic conditions,” Bennet said.

In addition to the new unemployment insurance mandates, the bill would also provide support for part-time workers and those in the gig economy, like freelancers or people who drive for Uber and other ride-share companies. This type of support would be under a new program called a Jobseeker Allowance, where workers would receive $250, essentially extending the Pandemic Unemployment Assistance weekly benefit program that was formed to help gig economy workers during the pandemic.

And if states refuse to comply with the new standards, they could face massive financial penalties.

It’s unclear whether the bill will see success on Capitol Hill, despite the Democrats’ razor-thin margins in both congressional chambers. The measure is unlikely to receive bipartisan support, as Republicans have generally balked at pumping more federal aid into the pockets of Americans, arguing that it offers a disincentive for people to return to work.  

But if more Senate Democrats stand behind the measure, Senate Majority Leader Chuck Schumer (D-N.Y.) could consider adding it as an amendment to the $1.9 trillion relief package, which would push the legislation into law via budget reconciliation and avoid a filibuster in the upper chamber. 

“Congress has gone through two recessions with an outdated, broken-down unemployment system, and enough is enough,” Wyden said. “Congress muffed it after the first recession, and we are determined that this not be muffed again.” 

Rachel Bucchino is a reporter at the National Interest. Her work has appeared in The Washington Post, U.S. News & World Report and The Hill.  This first appeared earlier and is being reposted due to reader interest.

Image: Reuters