By Eric Morath
The federal government spent nearly $250 billion on extra
$600-a-week unemployment benefits from early April to the end of
July, the Labor Department said, as millions of workers were laid
off because of the coronavirus pandemic.
Workers who permanently lost their jobs, were furloughed or had
their hours cut were able to tap $600 in federal unemployment
benefits on top of the amount they qualified for from the state,
under a relief law Congress passed and President Trump signed in
The benefits expired on July 31. Mr. Trump on Saturday signed an
executive order that would replace the larger payments with $300 a
week in enhanced unemployment benefits, and called on states to
provide another $100 a week. The White House remained deadlocked
Monday over a broader pandemic relief deal with Democratic
lawmakers, who said the president's moves over the weekend were an
unconstitutional breach of congressional spending powers.
Individuals tapping regular state programs, the largest source
of benefits, at the beginning of August saw weekly payments decline
to near the $332 average weekly payment made under those programs
in the past year. Self-employed and gig workers -- who don't
usually qualify for unemployment assistance -- saw a steeper
decline in payments.
The $600 payments, known as Federal Pandemic Unemployment
Compensation, were paid out to states starting the first full week
of April. The peak week for payments came the week that ended June
26, when $18.6 billion was distributed, according to Labor
Department data requested by The Wall Street Journal. That equates
to about 31 million $600 payments that week, though a Labor
Department spokeswoman said weekly amounts might include back
California received the largest total amount, $38.4 billion, and
South Dakota received the least, $177.1 million, according to the
Michigan received the largest amount of benefits when adjusting
for the size of the labor force in February 2020, before the
pandemic took hold in the U.S. The state received $2.9 million per
1,000 workers in the state. It was followed by New York and
Pennsylvania. Nationally, about $1.5 million in benefits were paid
per 1,000 workers, counting both the employed and unemployed.
Michigan was among states with the most unemployment
applications in March and April when auto-factory shutdowns rippled
through the manufacturing-heavy state. Those plants have since been
allowed to reopen.
The benefits total represents about a 12th of the approximately
$3 trillion in economic stimulus Congress approved in March relief
bills. The amount is a more substantial portion of the $1.7
trillion so far distributed or committed from the Cares Act,
according to the Committee for a Responsible Federal Budget.
The enhanced benefits helped prop up households that lost jobs
as well as the broader economy, economists have said. Despite a
historically high unemployment rate, household income in June was
above the level it was in February, before the pandemic had spread
widely in the U.S., according to the Commerce Department. The
increase in unemployment insurance payments more than offset the
decrease in wage and salary income.
Some Republicans and conservative economists say the benefits,
which in many cases pay workers more than they earned at their
former jobs, is a disincentive to returning to work.
A study published last month by Yale University economists found
that workers with more generous jobless benefits didn't experience
larger employment declines when the benefits took effect and that
they have returned to their previous jobs at similar rates as
Michael Strain, an economist at the right-leaning American
Enterprise Institute, said the $600 benefits likely didn't dissuade
many from returning to work this spring, when wide swaths of the
economy were closed. But he said maintaining benefits at that level
until next year, as House Democrats proposed, would discourage
Americans from rejoining the labor force as the economy begins to
recover from the pandemic.
"It's not reasonable to pay workers more in unemployment
benefits than they make at their jobs," he said. "Doing so would
keep the unemployment rate high longer than it should be."
Alix Gould-Werth, director of family economic security policy at
the left-leaning Washington Center for Equitable Growth, said the
$600 payments succeeded in propping up consumer spending and
allowing Americans to buy groceries and pay rent.
She is skeptical that smaller additional payments of $300 or
$400 a week would be as effective. She projected those payments
wouldn't arrive until September and expects the emergency funds Mr.
Trump directed to be used for such benefits would be exhausted in
about five weeks.
The federal government spent an average of $16.6 billion on the
$600 enhanced benefits in the last four weeks of July, according to
the Labor Department data. Renewing benefits at half that rate, or
about $8.3 billion a week, would exhaust the $44 billion Mr. Trump
allotted in under six weeks.
"The reduction in benefits will hurt workers, particularly
low-wage workers and workers of color," Ms. Gould-Werth said.
Claudia Peterson tapped the unemployment benefits, including the
extra $600, during two furloughs from Wallis Annenberg Center for
the Performing Arts in Beverly Hills, Calif. Ms. Peterson, who
remains unemployed, said through last month the combination of
federal and state benefits roughly replaced her wages as a
technical director at the theater. That allowed her to keep up with
rent and order food from restaurants as she sought to support local
Now that the benefits have expired, she said she asked her
landlord to defer rent, but the landlord, an individual, is unable
to get a deferral on the mortgage, Ms. Peterson said. An additional
benefit of $300 or $400 a week would keep her financially afloat,
she said, but isn't enough to allow her formerly self-employed
roommate to make rent. The 29-year-old added she isn't optimistic
she would receive such an enhanced payment before her rent is next
"I don't feel very secure. At this point I'm trying not to spend
any money," Ms. Peterson said. "I'd love to work, but there's not
any work to be had."
Write to Eric Morath at email@example.com
(END) Dow Jones Newswires
August 11, 2020 14:15 ET (18:15 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.