UNEMPLOYMENT INSURANCE
COULD
CORONAVIRUS
AFFECT
UNEMPLOYMENT
INSURANCE?
There are a lot of questions
surrounding COVID-19 and
its effects on the economic
and political landscape. One
thing that isn’t in question,
unfortunately, is how many people are
now finding themselves out of work and
trying to file for unemployment insurance.
On March 27th, the government passed
the Coronavirus Aid, Relief, and Economic
Security (CARES) Act to alleviate some
of the burden on the economy. The
CARES Act expanded the unemployment
insurance (UI) system.
The UI program is meant to replace some
of the wages of workers who have been
laid off under the provision that they
are both available for work and looking
for work for up to 26 weeks. The details
vary between states, but UI usually ends
up replacing over half of the previous
wages that the workers made. The states
themselves have a lot of flexibility when
they are determining UI benefits. The
federal requirements simply require basic
protections for workers who are eligible,
which has subsequently led to the states
having a significant amount of variation
between them when it comes to the
eligibility requirements.
What the CARES Act has done is extend
the duration of UI benefits past the 26-
week mark by 13 additional weeks and
increase payouts to those workers by
$600 a week through July 31st. Thus, the
maximum amount of UI benefits available
to workers who qualify is going to be
above 90% of the average weekly wages of
all 50 states. The eligibility requirements
for UI has also been expanded (though
temporarily) to include the self-employed,
independent contractors, freelancers, and
part-time workers who are unemployed
during the pandemic.
Though the CARES Act is a great first
step, it isn’t the end of the potential
changes that could come. For one thing,
the $600 benefit expansion expires in
July and the eligibility changes expire in
December. It is hard to tell whether the
current economic climate will change
enough by those dates for the economy
to recover and those jobs to come back.
Another large aspect of this is the states
themselves and their own unemployment
insurance benefit programs. State
spending on UI isn’t subject to balanced
budget rules, which means that the states
are able to borrow from the US Treasury
to pay those benefits. The problem is that
they have to repay anything they borrow
within two to three years.
COVID-19 has already caused
unprecedented damage to the economy
and to people’s health and changed the
perspective many have on almost all
aspects of daily life. What it will do in
terms of changing UI in the long run
is not clear, but it has made perfectly
obvious where the shortcomings in the
system are and how they may need to
be changed to be more flexible moving
forward. With added flexibility in the
rules, chokeholds (such as the need to wait
for Congress to enact changes) may not be
as common. +
BY: GWENYTH P. LUU, CLCS
DIRECTOR - COMMERCIAL LINES
JGS INSURANCE
Gwenyth Luu helps organizations
improve their bottom line and lower their
total cost of risk by implementing the
JGS Proactive Service Platform. The JGS
Proactive Service Platform is an inclusive
strategy that focuses on primary cost
drivers of a risk management program.
Gwenyth helps businesses understand
all of their potential and actual costs
and liabilities, execute an actionable
strategy, and deliver superior client
service and support. The JGS Proactive
Service Platform is driven by continuous
strategy and service delivered on a daily
basis throughout the year. The service
platform includes risk control strategies,
claims advocacy and management,
contract reviews and insurance program
design reviews.
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