COVID unemployment: What the unemployed need from politicians right now

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Kevin Williams saw his Uber and Lyft drives disappear overnight after Ohio issued stay-at-home orders in late March. The Columbus resident would go on to join the more than 30 million Americans receiving unemployment benefits over much of the spring and summer.

While the easing of restrictions in his state is bringing back some of those rides, Williams earns only one-third of what he made prior to the orders. So he still qualifies for Pandemic Unemployment Assistance—which expanded unemployment to contractors and part-time workers through the CARES Act.

This story is part of a special report examining what’s at stake for a wide range of industries—and for many workers—in this year’s election.

Even as the economy improves—adding more than 10 million jobs since the end of April—more than 25 million are still receiving some form of unemployment insurance. What many Americans assumed was a temporary jobs crisis has in fact turned into a long-term unemployment crisis as we cross the six-month threshold since the start of the pandemic.

As the country prepares to head to the ballot box, Fortune took a look at some of the solutions Capitol Hill is considering to help the unemployed.

More economic stimulus

The U.S. moved from contraction to recovery back in the spring, and since then the unemployment rate has fallen from its peak of 14.7% in April to 8.4% in August. However, that economic recovery is showing signs of slowing. By late September we learned another 870,000 new unemployment claims had been filed as employers continued to turn to layoffs to make up for pandemic-related losses.

Goldman Sachs lowered its expectations for U.S. fourth-quarter GDP growth from 6% to 3% on a quarterly annualized basis. Why? Goldman Sachs researchers point to the lack of additional fiscal support from the federal government.

“We’re in a lull of economic activity as the recovery moves sideways,” says Ryan Sweet, head of monetary policy research at Moody’s Analytics. “The effects of the stimulus have faded, and the secondary effects of the recession are enforcing themselves: more businesses failures, more layoffs.”

The best way to reduce unemployment, Sweet says, is for Congress to pump in more stimulus that will speed up the recovery.

The $2.2 trillion CARES Act passed in March helped to keep the economy afloat in the spring and drive the recovery once stay-at-home orders were eased. But that money is largely spent now, and talks to allocate more have been unfruitful: Democrats refuse to lower their stimulus ask of $2.2 trillion, and the White House won’t come up from its offer of $1.3 trillion. On Thursday White House officials and House Speaker Nancy Pelosi announced they’d resume stimulus talks after a three-week hiatus.

Both parties support the next package including a second round of stimulus checks, an extension of enhanced unemployment benefits, and more aid for small businesses and hospitals. They’re in disagreement on items like COVID-19 lawsuit immunity for businesses, which Republicans support, and more than $1 trillion in federal aid to state and local governments, which Democrats support.

Presidential candidate Joe Biden supports another massive stimulus package—although he doesn’t give a price tag. The Democrat would like it to include funding for another round of stimulus checks, aid for small businesses, forgiving $10,000 per person of federal student loans, and increasing monthly Social Security checks by $200 per month.

Extended enhanced unemployment benefits

More than 29 million Americans were receiving $600 enhanced weekly unemployment benefits, paid on top of state benefits, when it expired the week ending July 25. That benefit was replaced by a $300 enhanced payment that President Donald Trump issued through a memorandum in August. But that $300 payment is set to expire before the end of the month as funding runs out.

Without that enhanced benefit, unemployed Americans are likely to cut back on consumer spending—which accounts for two-thirds of the economy.

If the enhanced unemployment benefits are to be extended again, it will likely take an act of Congress. Democratic House leaders and Trump both want to extend the benefit through the end of the year; they aren’t in agreement on the amount, however. Democrats and Biden would like to see the benefit go back to $600 per week, while the White House prefers something closer to $300.

The holdup for Republicans is that the $600 weekly benefit—when combined with state aid—paid 7 in 10 unemployed Americans more than they made while working. GOP lawmakers argue that could take away the incentive for jobless Americans to find work.

Researchers aren’t finding strong evidence that the enhanced benefits discourage work. Indeed, Yale researchers found the benefit did not elevate unemployment during the spring, while JPMorgan Chase researchers found the benefit boosted consumer spending this spring and summer.

Fix the broken unemployment benefit system

When the pandemic hit, the jobless rate soared from the lowest in 50 years to the highest in 80 years. That quickly overwhelmed unemployment offices. Some states saw their unemployment websites crash for days, while others took weeks—sometimes months—to process unemployment insurance claims.

Karen Engels immediately applied for unemployment benefits in Florida after losing her job at a country club in March. The 44-year-old called the state hundreds of times and waited two months before getting her first unemployment check.

“For people not to get paid for months is detrimental. Some people can’t survive without getting payments for two months,” she told Fortune.

But with more than 25 million still getting some form of unemployment benefit, those issues are still here. Ohio’s unemployment office reached out to Kevin Williams this month to tell him that his income was incorrectly calculated, and the state had been overpaying him since March. Instead of giving him a window to pay it back, the unemployment office will just pull the money from his future benefits. Ohio has effectively thrown Williams off unemployment insurance.

Outdated technology affects everything from customer service to payments. In fact, one of the reasons the government turned to a blanket $600-for-all unemployment benefit is that states lacked the capabilities to calculate a plan that would replace a percentage of your regular weekly pay.

Help the long-term unemployed

Millions of Americans have been out of work since the start of the shutdown. For these folks, it’s unlikely at this point they’ll return to their previous employer, or maybe even their previous career.

That means millions of unemployed Americans could need retraining or new skills, something that could require help from the federal government.

Pavlina Tcherneva, an associate professor of economics at Bard College, says a massive retraining program would only do so much. The author of The Case for a Job Guarantee argues the federal government should step in with a massive government jobs program that hires millions of Americans to work on infrastructure projects, green energy initiatives, and pandemic-related work. Neither Trump nor Biden have proposed such a plan. The Green New Deal bill in Congress, however, is similar to what Tcherneva is proposing.

“I don’t think we’ll get out of this hole unless the public sector does some pretty bold public programs,” Tcherneva says.