Market Overview

What could replace the $600 weekly unemployment boost as new jobless claims rise

The number of Americans filing for unemployment ticked back up after 15 weeks of trending downward, with 1.4 million people submitting initial jobless claims for the week ending July 18. Roughly 1 million more freelancers, independent contractors, gig workers and people previously not eligible for unemployment filed for benefits under the Pandemic Unemployment Assistance program.

The rebound in people filing new unemployment claims comes as coronavirus cases surge across the country and states stall or reverse reopening plans. And the weekly $600 benefits lifeline expires after this week.

With the clock ticking for more than 25 million Americans set to lose their enhanced benefit soon, the Senate returned from recess this week and began discussing a new round of coronavirus relief aid. Sources told CNBC Wednesday that Republican lawmakers were considering extending enhanced unemployment pay at $100 per week, or $400 per month, for the rest of the year. By Thursday morning, Treasury Secretary Steven Mnuchin said the Republican coronavirus relief plan will extend enhanced unemployment “based on approximately 70% wage replacement.”

State-administered unemployment aid aims to replace about half of a worker’s previous wages, though it averages out at around 45%. Nationwide, that comes to an average unemployment benefit of around $320 per week, according to data from the U.S. Department of Labor. However, sums range widely depending on the state, with Washington paying $497 per week on average and Oklahoma paying just over $44 as of May 2020.

Due to the current size of the $600 boost, roughly two in three people earn more on unemployment than they did from previous wages. Republican lawmakers are critical of extending unemployment aid at this rate, saying it discourages people from going back to work. Many economists disagree with the assertion.

Still, even unprecedented spending on pandemic relief aid, which has kept 10 million Americans out of poverty this year, has still left many struggling to make financial ends meet. Nearly one-third of households didn’t make their housing payment for the month of July.

What could replace the $600 weekly unemployment boost as new jobless claims rise, CNBC, Jul 23

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