Out-of-work Americans have found themselves "back to square one," as Congress failed to extend the $600 weekly pandemic relief payments that expired two weeks ago. In response, President Donald Trump said he would bypass the legislature with a highly dubious executive action restoring the payments to $400 a week.
When Trump announced the $44 billion program, he called it "generous," and then blamed Democrats for lack of legislative action and China for the economic fallout resulting from the health crisis (an oft-repeated trope seen as tied to a rise in hate crimes against East Asians). His Treasury Secretary, Steven Mnuchin, said most states could execute the brand new program "within the week or two."
But the checks could take weeks to end up in people's bank accounts, if they arrive at all. And they may end up being just $300.
"I don't think [people] can expect much of anything right away," George Wentworth, the senior counsel with the National Employment Law Project, told Gothamist.
The program overhauls the previous Federal Pandemic Unemployment Compensation program, replacing it with a new one, dubbed Lost Wages Assistance.
The Labor Department would work with the Federal Emergency Management Agency to direct up to $44 billion in emergency disaster relief funds to states via grant agreements.
Getting the money from the federal government to the states and into people's bank accounts could take until at least September, particularly as state labor departments, including New York, saw outdated systems slammed under the early waves of applications from those who lost work due to the pandemic. States rushed to catch up to the increased demand for unemployment money, but the new program would call for a whole new system.
The Lost Wages Assistance program would also have a new eligibility requirement that would omit workers making less than $100 a week under regular unemployment insurance. That would prevent part-time workers from receiving the federal boost.
And that's if states choose to willingly participate— under Trump's plan, they would have to pay for $100 of the total $400 payment—something Governor Andrew Cuomo has called "impossible" and "laughable." Cuomo estimates the cost on the state would be another $4.2 billion, while the state is already sitting in a $30 billion two-year budget shortfall with mass cuts to schools and healthcare looming.
In New York, that cost "is a very significant additional burden for the state's budget that's already been suffering," said chief economist with the Fiscal Policy Institute Jonas Schaende.
State labor departments could use previously allocated federal COVID-19 funds to make up the $100, or just count standard state unemployment benefits towards that portion. If the state chooses the latter, the extra payment would be $300.
Earlier this week, Cuomo speculated the memorandum would be challenged in court.
"I think there is serious legal questions to be challenged and no one will get anything and the situation will get even worse," Cuomo said during a press call. "Your solution is to cost me $4 billion? Thank you. That is handing the drowning man an anchor."
Trump's program is supposed to last through December 27th, or until the $44 billion runs out. But Wentworth says based on how many people were collecting benefits previously, the program would last about five weeks.
"The pandemic has really laid bare what rough shape the nation’s unemployment insurance program is in," Wentworth said. Adding another program with "questionable legal authority, unaccounted-for administrative costs, and new eligibility rules" is irresponsible, he noted.
"It’s unfair to raise hopes of unemployed workers that it’s going to mean any real assistance anytime soon," he said.
The state's Department of Labor deferred to Cuomo's earlier statements, when asked about if the department is moving ahead on taking those federal funds, or opting out.
In a message to people collecting unemployment payments, the department urged New Yorkers to continue certifying weekly.
"We understand there may be confusion following the President's announcement about additional unemployment benefits. While open questions about this announcement are resolved, please continue to certify weekly to ensure you receive your Unemployment Insurance (UI) or Pandemic Unemployment Assistance (PUA) benefits," the message says.
The National Governors Association, now chaired by Cuomo, urged Congress and the White House to reach a "quick resolution to provide immediate assistance to unemployed Americans," and said the current proposal would place "significant administrative burdens and costs" on already cash-strapped states.
Trump's program would expire if a deal through Congress were passed, the memo says. But negotiations between the administration and Congress continue to go nowhere.
House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer said Wednesday that the White House "is not budging" on the size of a new stimulus package. "Repeatedly, we have made clear to the Administration that we are willing to come down $1 trillion [to $2 trillion] if they will come up $1 trillion," they said in a statement.
Mnuchin said it was Pelosi who was "unwilling to meet to continue negotiations unless we agreed in advance to her proposal costing at least $2 trillion."
While the administration and congressional leaders argue, roughly one-third of New York City workers don't have jobs, higher than the typically used official estimate, according to a new report.
Though the official unemployment rate was about 20.4 percent in June, nearly one-third (32.7 percent) of the city's February labor force were collecting unemployment benefits that month, according the report from The New School's Center for New York City Affairs. The report calculated the higher unemployment rate by percentage of those collecting unemployment benefits from the city's February labor force—rather than a survey based on whether a jobless worker had looked for a job in a given week.
The out-of-work percentages are higher in the Bronx (40.2 percent), Brooklyn (34.1 percent) and Queens (36.9 percent).
Economist James Parrott, who co-authored the report, called Trump's action for those unemployed "for show."
"If [Trump] were serious about doing something, he would have pressed his Republican colleagues to seriously negotiate with Democrats, and we'd have a bill, so [it's] not a serious proposal," Parrott said.
Schaende, with the Fiscal Policy Institute, said that waiting for a different solution isn't viable for millions of unemployed people who need relief now.
"Their own family budgets just got significantly reduced, and so they may not be able to meet their obligations like rent, car payments, food, et cetera, and so this is not an abstract conversation," Schaende said. "I don't think that [the decision makers] have the incentive to just sit there and wait until something new comes along. Even if the unemployed get a reduced amount, it would still go to help them and their families to sustain their level of consumption until something new is worked out."
With reporting contributed from WNYC's Mirela Iverac.