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My May 13th post drew some fire.  I pointed out the incongruity in Senator Lindsey Graham being thankful for the generous Social Security Survivor Benefits his family received and his unwillingness to support the extension of pandemic unemployment insurance (UI) for America’s 35M newly unemployed workers.  Some of you pointed out correctly that Senator Graham did not oppose UI itself, but rather the $600 per week “pandemic” unemployment benefit added to the joint federal/state program through July.  (Congress unanimously approved and President Trump signed the UI enhancements into law under the omnibus $2T Coronavirus Aid, Relief, and Economic Security (CARES) Act on March 27th.) I apologize for not pointing out that Senator Graham voted for the CARES Act.  I am sorry as well for not describing his “over our dead bodies” opposition in more detail.  

During the debate over the CARES Act, Senator Graham supported the unsuccessful “Sasse” Amendment.  It “would have corrected an error in the bill,” he argued, “that would cause some individuals to make more money from unemployment benefits than they would working a 40 hour a week job.”

There is some truth in the Senator’s argument.  A small percentage of laid off American workers have benefitted in the way he feared.  (Those beneficiaries are typically from states with more generous UI provisions.)

Historically, UI has paid out less than half of an unemployed worker's previous weekly salary.  (Note: UI income has been and is fully taxable.)  The supporters of “pandemic” UI recognized that traditional UI benefit levels would leave the vast majority of displaced workers struggling to pay their family housing, healthcare, and food bills. The proponents employed the blunt instrument of the $600 per week payments in an attempt to make suffering families whole.  (Since layoffs dwarf hirings these days, few will be “choosing” to stay unemployed, whatever the percentage of lost income replaced.)

CARES improved UI in other ways.  The Act extended UI benefits to the growing numbers of self-employed “gig” workers, who were not covered by UI during or since the Great Recession of 2008-9. (See my post of November 19, 2013).  CARES also extended the potential UI benefit duration by 13 weeks.

The Congress now debates an extension of the CARES Act, which concludes in July. It would seem there could be bipartisan agreement on the following common sense fixes to UI:

1. Claw back through tax policy any UI payments received in excess of 100% of prior income.

2. Extend UI program provisions to gig workers permanently.  They should pay in when the sun is shining and benefit when the storm comes.  (The average American worker will lose 4 jobs in his or her lifetime.)

3. Require states to commit to replacing two thirds of prior income for involuntarily employed workers.  This level of support should continue for up to the traditional 26 weeks UI period.  

4. Eliminate taxes on this UI income.

5. Have built in triggers that expand and extend UI benefits automatically during recessions (and pandemics).

6. Provide funds to states to modernize their UI information technology systems.  (Clunky, old IT systems in part explained why the one size fits all $600 payment was the chosen benefit enhancement remedy.)

Let’s use this crisis to modernize and improve American Unemployment Insurance!  

For more on UI, see chapter 8—The Threat of Involuntary Unemployment-- of my book, or see https://www.cbpp.org/research/economy/policy-basics-unemployment-insurance.