Biden’s ‘American Rescue Plan’ Gives Benefits to Low-Unemployment States

January 31, 2021 Topic: economy Region: The Americas Blog Brand: The Reboot Tags: Joe BidenCoronavirusUnemploymentFederal AidBenefits

Biden’s ‘American Rescue Plan’ Gives Benefits to Low-Unemployment States

The Pandemic Emergency Unemployment Compensation (PEUC), currently offers 24 weeks of benefits in all states, with no targeting of any of those payments to high-unemployment states.

One of the historic firsts the Biden administration has not touted is how its $1.9 trillion “American Rescue Plan” would provide an unprecedented amount of completely untargeted federal unemployment benefits. That is, if enacted, the president’s plan would pay the same duration of federal benefits in all states regardless of their unemployment rate. Counting typical state benefits, that would provide more than 18 months of unemployment checks — the longest course ever paid — in a growing number of states with low unemployment rates.

That’s the opposite of the longstanding and widely accepted practice of targeting federal unemployment benefits where need is greatest. For example, since 1970, the federal-state Extended Benefits (EB) program has paid unemployment checks to the long-term unemployed only where elevated state unemployment rates indicate finding work is more difficult. And in every recession since 1970, Congress has enacted a temporary program of federal benefits for those who exhaust up to 26 weeks of state unemployment checks, at least partially targeted to those in high-unemployment states. 

That is, until now. As the table below displays, today’s temporary federal program, called Pandemic Emergency Unemployment Compensation (PEUC), currently offers 24 weeks of benefits in all states, with no targeting of any of those payments to high-unemployment states.

Maximum Weeks of Federal Temporary Benefits Payable in Low-Unemployment versus High-Unemployment States, 1970s-Present

Temporary Federal Program Maximum Weeks Payable in Low-Unemployment States Maximum Weeks Payable in High- Unemployment States Degree of “Targeting” to High- Unemployment States
1972-73 13 weeks* Full
1975-78 26 weeks* Full
1982-85 Varied from 2-8 weeks Varied from 10-16 weeks Partial
1991-94 Varied from 6-26 weeks Varied from 20-33 weeks Partial
2001-04 13 weeks 26 weeks Partial
2007-13 Varied from 13-34 weeks Varied from 13-53 weeks Partial
2020-21: Current law 24 weeks Same as in low-unemployment states None
2020-21: With addition of Biden “Rescue Plan” Added 29 weeks = 53 weeks Same as in low-unemployment states None

*Also required elevated national unemployment rate for benefits to be payable.

Source: Congressional Research Service.

While proposing to extend current temporary programs, the Biden plan makes no mention of targeting benefits to high-unemployment states. For example, regarding recipients under one current temporary federal program, the plan says simply the president “supports increasing the number of weeks these workers can receive the benefit.” In the context of “calling on Congress to extend these and other programs” through September, that means his plan would expand benefits by 29 weeks — while continuing the current practice of no targeting. Thus, the same 53 weeks of federal benefits would be payable in the seven states with current unemployment rates below 4.0 percent as in the nine states with rates above 8.0 percent.

That lack of targeting is at odds with recent legislation introduced by Senate Democratic leaders, which would permanently tie the payment of federal unemployment benefits to elevated unemployment rates. If enacted today, that proposal would offer fewer than the president’s proposed 53 weeks of federal benefits in over two-thirds of states with relatively low unemployment rates, while offering more weeks in the remaining one-third of states with relatively high rates.  

President Biden’s proposal is also at odds with the targeting applied when 53 weeks of temporary federal benefits were last paid during the Obama-Biden administration. Applying those 2012 formulas would pay increasing durations of federal benefits as unemployment conditions worsen — providing 20 weeks in 17 states, 34 weeks in eight states, 47 weeks in 19 states, and 53 weeks in nine states with the highest unemployment rates (Note: There are a total of 53 US states and territories that operate unemployment programs). Again, that’s in contrast to the president’s current proposal to pay 53 weeks of federal benefits in every state, ironically including many red states with lower unemployment rates.

The president’s proposal could evolve as Congress turns it into legislation, targeting some of its proposed benefits to where need is greater. If so, that would bring his proposal more in line with bipartisan agreements providing benefits in the past as well as how his fellow Democrats propose paying benefits in the future. Without such adjustments, and counting up to 26 weeks of state benefits, the Biden plan promises the unprecedented: over 18 months of unemployment benefits — including $400-per-week bonuses — even where low unemployment suggests jobs are readily available.