How will Joe Biden’s administration help unemployed workers? Here’s what experts say
A more efficient unemployment system? In the Biden administration, there’s new hope.
But bigger, longer unemployment benefits? Uncertain.
Those are the predictions from the experts about what a Biden administration will mean for the millions of unemployed people in California and the nation. They’ll find a friendlier voice, and an administration eager to help.
“Unemployment insurance should be a higher priority than in the past,” said Andrew Stettner, senior fellow and unemployment expert at the Century Foundation.
But there’s only so much a president can do.
President-elect Joe Biden has long been regarded as a strong ally of labor unions, as a U.S. senator from Delaware for 36 years and then and as President Barack Obama’s vice president.
In his 2016 State of the Union address, Obama urged a sweeping set of reforms, including expanding unemployment coverage so that people could get a minimum of 26 weeks, and include those who had not traditionally been eligible.
His proposals went nowhere in a Congress run by Republicans.
The GOP could run the Senate next year, while Democrats run the House. But there is new hope that as the nation slowly recovers from its worst economic downturn since the Great Depression, lawmakers will seriously consider changes in an unemployment system often plagued this year with disarray and dysfunction.
“I’m sure he will push unemployment insurance modernization with the big question being whether he proposes something bigger/bolder than Obama/Biden did in 2016,” said Shawn Fremstad, senior fellow at the Center for Economic and Policy Research in Washington.
“That was a decent proposal,” he said, and “given how bad of shape unemployment insurance is in, but it will be disappointing if there isn’t bolder thinking in 2021.”
The deluge of California jobless claims has persisted. The average daily benefits paid in the week ending October 31 was $221.1 million, 254% higher than the average paid in the same week in 2010, as the state was still feeling the impact of the Great Recession.
Can the system run smoothly?
Because federal money pays for many parts of the unemployment program, Washington can have a strong role in how the system works.
“There are ways the federal government can use its authority,” said Chris Hoene, executive director of the California Budget & Policy Center.
Critics have said for years that President Donald Trump’s Labor Department is not being vigilant enough in prodding states to pay claims on a timely basis and pare huge backlogs.
Backlogs have been an issue in California. In September, when Gov. Gavin Newsom created a strike force to help make the state’s Employment Development Department operate more efficiently, there were 1.1 million claims pending.
Most have been resolved, but new claims have been coming in, keeping the backlog up.
Overall, the foundation concluded states are still “struggling” to make payments.
It did praise Newsom’s strike force. “Other state leaders should follow California’s lead with thorough investigations of why claims are being processed so slowly, and a plan to deal with all pending applications,” the foundation’s report said.
Will weekly payments go up?
Don’t expect a sudden boost in weekly unemployment payments.
“There’s not much the president can do as far as getting more benefits to people,” said Heidi Shierholz, senior economist at the Economic Policy Institute in Washington. She was the chief economist at the U.S. Labor Department during part of the Obama administration.
Biden would need help from Congress. There are two areas to watch.
One is the fate of the Pandemic Unemployment Assistance program, which provides benefits to people such as independent contractors who traditionally would not qualify for regular state benefits, and the Pandemic Emergency Unemployment Compensation program, which provides extra weeks of benefits to longer-term jobless people. Both are due to end late next month.
Any change would require congressional approval, and there is some Republican support for an extension.
Biden campaigned saying he would “extend COVID crisis unemployment insurance to help those who are out of work.”
He said he would require employers to allow those in a high-risk group, or has a high-risk person in their home, to work at home. If those arrangements can’t be made, Biden promised people would “be allowed to continue to draw unemployment benefits and be protected from job loss. The benefit would last for the duration of the crisis.”
Efforts to boost the programs have so far gone nowhere in the Senate.
The other issue involves the amount of any payment. When Congress refused to extend the $600 a week supplement provided to unemployed people from March to July, Trump took executive action in August and added several weeks of $300 payments.
Biden could do the same, but it would be tough. Trump was able to tap a pot of disaster relief money that’s not available anymore. While many Republicans support extra payments, they’ve historically been reluctant to agree without some way to pay for them.
Will the state have enough money?
California’s unemployment funding has been troubled for years. Regular state benefit payments available to qualified salaried and hourly workers are supposed to be paid largely by a tax on employers.
That tax brought in $5.6 billion last year, and revenue is expected to reach $5.2 billion this year and $4.3 billion next year, according to a report last month by the state’s Employment Development Department, which manages the state’s unemployment insurance program.
The state estimates it will need funds to pay $30.6 billion in regular state unemployment benefits this year, as well as a total of $32 billion in both regular state unemployment benefits and the state’s portion of Federal-State Extended Duration (FED-ED) benefits next year.
By the end of 2020, it’s estimated the benefit fund will have a deficit of $21.5 billion, rising to $48.3 billion by the end of next year.
The Obama administration helped California the last time it faced this sort of shortfall. During the 2007-09 recession, the state began borrowing from the federal government to cover benefits.
Under the 2009 economic relief plan pushed by Obama, interest on the borrowed money was waived through the end of 2010. It then took California until the end of 2018 to pay off the loan balance and interest on the loans.
The state this year has borrowed a little over $19 billion so far, and interest has been waived. But it will start accruing again on January 1, unless the government acts.
So far there’s been little talk about new breaks for strapped states. But as Rep. Pramila Jayapal, D-Wash., who is active in unemployment issues noted, “This is not a time to think about reducing spending.”
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