July 31, 2020
In March, the CARES Act extended and expanded unemployment benefits in welcome ways. Millions of people who were previously not eligible for regular unemployment benefits, such as independent contractors and gig workers, qualified for benefits that effectively replace 100% of wages for the bottom half of the workforce.
The extra $600 in assistance, on top of regular unemployment benefits, was meant to bolster the partial coverage of wages typically provided by unemployment insurance (UI) -- on average, typical UI payments cover about 41% of an American worker’s salary, according to the Brookings Institution.
With persistent and rising unemployment across the country during the worst economic downturn in at least four decades, this assistance has made a significant difference over a short period of time for those who have been able to access it. Moreover, these benefits don’t just provide a critical lifeline to the families receiving it, but also to the economy overall. Economist Mark Zandi found that for every dollar issued in benefits, $1.61 went back into the economy.
Over the last several weeks, Project Redesign at the National Conference on Citizenship and New America’s New Practice Lab partnered to interview people who applied for these unemployment benefits across the country, to witness and lift up their stories. While we learned a great deal about opportunities to improve the design and delivery of unemployment benefits (more to come on this), today we want to share what we heard about the ways the recent expansion of unemployment benefits has proven critical for people during this challenging time. We highlight some of our take-aways below, with gratitude for those who have shared their stories with us.
Pandemic Unemployment Assistance, often in conjunction with other safety net programs, has done what it’s designed to do —provide emergency relief and prevent some from falling into poverty. Never have so many people become unemployed in such a short time in the U.S., and the CARES Act was passed quickly as a response to this crisis. Those who were able to access unemployment benefits in a timely way during this crisis navigated sudden loss of employment, and could make decisions that prioritized their health and the wellbeing of their families by not putting themselves in dangerous situations. As unemployment benefits expire and people run out of options for buying groceries and paying rent, many say they feel the need to go back to work at the risk of contracting COVID-19.
Mark was working at a coffee plant in Utah. While Utah didn’t have a shelter-at-home order in place, coffee shops started to close and business slowed dramatically. Mark was eventually furloughed due to a drop in sales. He immediately applied for unemployment benefits. Eventually, Mark’s boss gave him a 14-hour notice to return to work. Some of his colleagues had been sick and safety measures were not being enforced, so Mark decided not to return. When filling out questions for his weekly claim, Mark answered honestly that he turned down work, which kicked him off the system. Mark spends a lot of his time looking for other jobs and is worried about the safety of returning to work.
Pandemic Unemployment Assistance (PUA) –unemployment benefits provided to a broader category of workers including contractors, freelancers, and gig workers— was especially helpful for independent contractors and those who otherwise would have fallen through the cracks in today’s gig economy. Several of our participants were independent contractors, freelancers, or had multiple sources of income. Work ranged from freelance sound engineering to pet sitting, from bartending to lawn mowing - not unusual in today’s gig economy. They heard from friends, family, or social media that they should apply for this new class of unemployment benefits called Pandemic Unemployment Assistance (or PUA). In the cases where it came through quickly — a few days or up to a couple of weeks —participants found it incredibly helpful to help them make ends meet.
Christina was working as a bartender and applied for unemployment benefits when New Orleans and the local hospitality industry shut down. She struggled to file her claim because she had worked out of state for half the pay periods and did not understand how to enter this information into the system. Eventually, her application was approved and Christina has been able to receive benefits. However, she is getting less than she should qualify for since Louisiana will not recognize the income she made out of state. “It’s still not reflecting on my claim,” she said. When asked if she had tried to clear this up with the state worker who helped her before, she noted “I don't even know if I should be calling her. I’m entitled to that money. But there are still people who aren’t approved. I’m not trying to bother her.” Since she is able to get the $600 addition from the CARES Act, she feels like she’s able to get by for the time being.
Back-dating PUA payments to the beginning of stay-at-home orders was a relief for participants. Most of the PUA programs didn’t come online for states until mid- to late-April, 6 to 8 weeks after many had been ordered to stay at home. While it was difficult to wait for PUA to be implemented, as Anna from Massachusetts told us, she was grateful that she didn’t have to take any additional steps to get payments for the period before the program was implemented. Massachusetts automatically paid benefits dating back to the stay in place order during the first week of rollout.
It’s clear that PUA — working in tandem with other safety net and CARES Act programs, such as PPP — has provided a more robust support system during this crisis. For example, some independent consultants considered themselves small businesses, so they applied for Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDL) rather than file for unemployment benefits. Long before the pandemic, Mike, an independent consultant, set up his business so that he was paying into state unemployment and disability as an employer. So initially, he applied for regular unemployment assistance. But Mike’s UI and PUA claims still had not come through by the time we spoke with him on June 22, so he applied for PPP and EIDL at the same time he made his first UI claim, which came through quickly.
Some workers receive both W2 and 1099 income and are at a loss for how their unemployment benefits would be calculated. Instead of assuming all workers only make W2 income or only 1099 income, unemployment benefits should be calculated based on total income, regardless of income source.
Finally, the combination of one-time stimulus checks and additional $600 per week of unemployment assistance, according to what we heard, literally kept people fed and sheltered. Several participants shared that the stimulus check filled a gap while they waited for UI or PUA to come through. And many who were furloughed or had their hours reduced rather than being completely laid off said the stimulus check was helpful in filling the gap in income, at least for a short time. They could buy groceries for a few weeks, and pay other bills.
As millions across the country await news of what will happen to extended unemployment benefits after today, it’s important to take stock of what it has done for many in these recent months. It’s clear from our interviews that the most vulnerable in this crisis are using these funds to meet their basic needs for food and housing. Many are facing a decision between feeding their families and putting themselves in a potentially dangerous work situation with high risk of exposure to COVID-19. And many need support as they simply continue to navigate an uncertain employment environment with fewer opportunities and erratic schedules.
In recent years, we’ve seen a rise in alternative arrangements such as independent contractors, on-call workers, temporary help agency workers, and workers provided by contract firms as means of primary employment. Millions of workers without traditional main jobs are at risk of losing critical unemployment benefits as these alternative arrangements become obsolete or untenable. Today, more than ever before, should make us all painfully aware that the unemployment insurance — and general safety net — systems that we rely on today were built for a different era, one in which the social compact between an individual and their employer looked very different. Rather than working for one employer for W2 wages, many Americans are balancing multiple jobs to patchwork together enough income to get by — and many of them are only getting by due to assistance from other safety net programs like Medicaid and SNAP. We know that these workers never fully recovered from the last recession, and will struggle the most in today’s crisis.
Now more than ever we need a social safety net that meets the lived experiences of those who these programs are meant to serve. Pandemic Unemployment Assistance was a small step in the direction of meeting the needs of those navigating this crisis in the face of already insufficient wages, or multiple jobs that didn’t fit the mold for traditional unemployment insurance benefits. It would be devastating to many to see it expire.
Santiya in Greensboro, NC knows her additional unemployment benefit is expiring this month and fears this will be hard for her and others. “That’s the majority of my payment… so that’s gonna be stressful. Honestly, a lot of people in this time...need that extra $600 especially if the economy doesn’t pick up!”
About the interviews
This project was an experiment in human-centered policy design, in a partnership between Project Redesign at the National Conference on Citizenship and New America’s New Practice Lab. Our methods and approaches echo the framing of Equity Community Centered Design, originated by Creative Reaction Labs.