A Lapse in Unemployment Benefits is Inevitable. Here’s How to Prepare
A second economic rescue package is on the horizon, one that will likely include another stimulus check, funding for small businesses and schools, additional jobless benefits and more. But as lawmakers debate the finer points, a critical provision of the first relief package is set to expire.
Federal Pandemic Unemployment Compensation, or FPUC, boosts all Americans’ unemployment payments by $600 per week, automatically. That provision of the $2.2 trillion CARES Act expires July 31 unless Congress acts immediately to extend it.
That deadline is according to the wording of the CARES Act, but the payments effectively end sooner. State unemployment agencies typically operate on a Sunday to Saturday schedule (or vice versa), meaning the last unemployment payment including the $600 bonus will be paid out either July 25 or July 26.
With the clock ticking, that means jobless Americans are likely to see a lapse in their unemployment payments — even if Congress ultimately renews the bonus.
What’s Likely: Duration Extended, Payments Reduced
New legislation is expected to reduce the amount but extend the duration of the extra unemployment payments coming from the federal government.
According to GOP lawmakers who spoke to the Washington Post, a new federal unemployment bonus, should one be passed, is likely to fall between $200 and $400 per week.
Negotiations around a second stimulus package are expected to carry over into August — well past the July 25 expiration date for FPUC payments.
Even if Congress were to rally and extend FPUC payments before August, Michele Evermore, senior policy analyst at the National Employment Law Project, explained that states won’t be able to implement new federal payments without weeks-long interruptions.
“What’s going to happen is on [July] 25, states will stop paying the $600 and will have to turn that function off in their computer system,” Evermore told CNBC. “To get it started back up again, it may take a while to reprogram. I’ve been told that even in states with modernized systems, it could still take weeks.”
State Unemployment Programs Begin Expiring, Too
Approximately 26 million Americans collecting unemployment benefits face a $600 cut in weekly payments. On top of that, those approved for state assistance at the start of the pandemic are beginning to max out those benefits.
Thanks to the CARES Act, 13 weeks of additional Unemployment Insurance benefits are available. The extension isn’t automatic, though. Here’s how to apply.
Residents of Florida and North Carolina, two states that offer only 12 weeks of Unemployment Insurance against the national norm of 26, are already relying on the federal extension, called Pandemic Emergency Unemployment Compensation or PEUC. Evermore said in an interview with The Penny Hoarder that the extension will prove “incredibly crucial,” as more state programs expire in the coming weeks.
We can expect the number of people on PEUC to grow a ton as the crisis drags on and more of the more than 17 million people currently on regular state benefits exhaust their regular benefits and move on to PEUC. 15/
— Heidi Shierholz (@hshierholz) July 16, 2020
Heidi Shierholz, director of policy at the Economic Policy Institute and former chief economist of the Department of Labor, tweeted that as the coronavirus crisis drags on, more than 17 million people are expected to switch to PEUC.
The coming flood of applicants could clog an already-overburdened system. Adding to that, the Department of Labor advised state unemployment agencies to not automatically enroll eligible people into the PEUC extension program. People currently on Unemployment Insurance can’t pre-register, either.
Eligible applicants must wait until their state-level benefits are fully exhausted before applying for the extension, which by design, could lead to a lapse in unemployment payments.
Here’s How You Can Prepare
All roads lead to lapsed and/or reduced unemployment payments. Expecting the hiccups already puts you in a better position than having to deal with them on the fly.
Here’s what else you can do to prepare:
- Seek out a bridge job now before benefits expire. Applications to job openings are expected to explode once the $600 weekly bonus is gone. Start hunting for bridge jobs now. What are they? Lateral — or even downward ― career moves typically in a new job field. They’re not always glamorous, but they pay the bills. In-demand industries include shipping and delivery, online learning, grocery, operations and logistics, health care and cleaning services.
- Adjust your budget. A $600-a-week cut in income is deep, even if it’s partial or temporary. Switching to a bare-bones budget allows you to weather a loss of income by focusing on essential expenses. Pause monthly subscriptions and services, and consider making only the minimum payments on debts for the meantime.
- Check to see if you’re safe from eviction. The CARES Act put protections in place for people with federally backed mortgages. That, too, expires soon: July 25. But some states have additional protections. Here’s how you can see if you’re covered by an eviction moratorium.
- Reach out to your creditors and landlord. Financial hardship may qualify you for programs to pause or reduce your payments such as an income-driven repayment plan or deferment or forbearance for student loans. Consider negotiating with your landlord if you can’t pay rent if moratoriums don’t apply. Several major banks are also offering assistance to those financially affected by the pandemic.
- Land a work-from-home job. Some employers have had to send their workers home one day only to call them back the next. And then send them home again when COVID-19 cases spiked. To avoid the on-again-off-again shuffle, try to work for a remote employer. For fresh jobs with vetted companies, check out The Penny Hoarder’s Work-From-Home Jobs Portal. We post new job openings every weekday.
- Once you get some money coming in, launch a more judicious job hunt for a job you truly want. With a bridge job covering the bills, you might find it’s the perfect time to test out a creative business idea or side hustle. And if you want a more traditional job, use this time to brush up your resume, put some feelers out in your network – or learn an entirely new, in-demand skill set.
Weeks ago, many lawmakers were explicitly against additional unemployment benefits and stimulus checks. The landscape looks different now with the pandemic affecting every state, but we’re not out of the woods yet. Act now to get ahead of the curve.