There's a Push for Unemployment Reform in Democrats' $3.5 Trillion Package

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  • Worker advocates are trying to get reforms for the U.S. unemployment safety net into a $3.5 trillion package being floated by Democrats.
  • An initial House proposal didn't include reforms. But three senators want to add the Unemployment Insurance Improvement Act into the Finance Committee's portion of the measure.
  • Proponents fear political will for reform will fade once the Covid pandemic recedes.

Worker advocates and lawmakers are pushing for permanent reforms to the country's system of unemployment benefits, as part of a $3.5 trillion legislative package Democrats are drafting to expand the U.S. safety net.  

Those efforts got a shot in the arm on Monday, when three Democratic Senators introduced legislation to make benefits available to more people and for a longer duration.

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The trio— Finance Committee Chair Ron Wyden, D-Ore.; Michael Bennet, D-Colo.; and Sherrod Brown, D-Ohio — intend to include the Unemployment Insurance Improvement Act in the Build Back Better package, they said. House Democrats didn't include reforms in their initial proposal.

"We're still trying to claw our way into this deal," Judy Conti, government affairs director for the National Employment Law Project, said. "It's kind of a feeding frenzy right now."

The Covid pandemic exposed long-standing gaps in the U.S. safety net for unemployed workers.

Congress passed temporary measures in the CARES Act to bolster the system as millions applied for income support in spring 2020. Lawmakers offered extra weeks of benefits, additional money (an extra $600 a week, and later $300 a week), and expanded assistance to gig workers and others who don't typically qualify.

Those federal benefits expired nationwide on Labor Day. (Twenty-six states pushed to withdraw early, in June or July.)

Worker advocates hope to make many of the policies permanent, set baseline federal standards and establish a mechanism to automatically enhance benefits during economic contractions, for example. Key system elements, like benefit amount and duration, currently vary significantly from state to state.

But they fear federal reforms would be more difficult to achieve in the future once the memory of the pandemic's unemployment scars begins to fade.

"The political window to address these problems will certainly close by the end of 2022," said Francisco Diez, a worker justice policy advocate at the Center for Popular Democracy.

However, the CARES Act programs haven't been universally loved.

Many lawmakers, predominantly Republican, have lambasted enhanced benefits as a deterrent to work that's impeded the economic recovery and as wasteful, with billons of dollars lost to fraud.

Evidence suggests benefits' role in any labor shortages so far has been minimal. Lawmakers have passed safeguards to tamp down on criminal activity. Advocates also point to recent Census Bureau data — which report expanded benefits helped keep 5.5 million people out of poverty in 2020 — as an indicator of the programs' success.

But they've had to scale back some of their loftier reform aspirations to cater to political realities.

For example, setting a higher standard for the weekly benefit amount and automatic "stabilizers" would likely prove too costly for the $3.5 trillion budget measure, they said.

"There isn't room for that right now," Conti said. "But we'll be fighting for that tooth and nail on a continuing basis."

Moderate Democrats have already balked at the floated price tag for the overall legislation, which includes measures around climate, health care, education, paid leave and childcare.

The Senate bill proposed Monday would set a floor of six months for unemployment benefits. Most states currently offer a maximum 26-week duration of benefits. But some — Alabama, Arkansas, Florida, Idaho, Kansas, Missouri, North Carolina and South Carolina — offer less, according to the Center on Budget and Policy Priorities. (North Carolina offers up to 13 weeks, the least.)

The bill would also make more part-time workers eligible for benefits and require technological improvements.

"This program has been so broken for so long and has really failed workers in this country for many decades, that some improvement will be better than nothing," Diez said.

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