The stimulus package signed into law on Thursday by President Joe Biden extends unemployment benefits for millions of American workers who are still dealing with the economic fallout of the Covid-19 pandemic.
Unemployment benefits turned out to be one of the most hotly debated parts of the $1.9 trillion aid package, with legislators at odds over how long to extend benefits and for how much.
Some details of implementing the employment-related measures from the stimulus package have yet to be revealed, as they require guidance from the IRS or other government agencies that hasn’t been finalized.
Here’s what we know about extended pandemic unemployment benefits and when you can expect them.
$300 Weekly Unemployment Benefit Extension Until Sept. 6
The new stimulus package impacts unemployment benefits in the following ways:
- People eligible for unemployment benefits in their state will receive an additional $300 per week from the federal government. This amount will be available to people claiming benefits between March 14 and Sept. 6, 2021. This payment is an extension of Federal Pandemic Unemployment Compensation (FPUC), which was once worth $600 per week but has offered $300 per week since late Dec. 2020.
- If your income is below $150,000 per year, you won’t be taxed for the first $10,200 of unemployment benefits you received in 2020. Any unemployment benefits you receive over that threshold or any benefits you’ve received in 2021 will still be subject to income tax.
- Pandemic Unemployment Assistance (PUA), the federal program for self-employed, part-time and gig workers, will be extended through Sept. 6.
- Pandemic Emergency Unemployment Compensation (PUEC), which lengthens benefits for people who have exhausted the number of weeks for which they can claim unemployment, will be extended through Sept. 6.
- Mixed Earner Unemployment Compensation, which provides benefits for people who earn money from a mix of employment and self-employment, will be extended through Sept. 6. The benefit is worth $100 per week for eligible workers. Unlike other unemployment benefits, this money counts toward your income to determine your eligibility for Medicaid, meaning that it could potentially push you over an income cap that leaves you unable to get health care coverage through this channel.
When Will You Get Your Benefits?
Although the federal government is authorizing these extensions immediately, that doesn’t mean your unemployment benefits will be delivered seamlessly.
The last stimulus package was signed in late December 2020, but reprogramming state unemployment systems for the changes meant it ended up taking weeks to restart pandemic aid programs in some places. That left workers with smaller payments—or no benefits at all—while they waited for their claims to get approved.
It’s almost certain that similar payment gaps will take place again as states hustle to implement program changes and re-enroll people who had exhausted their benefits prior to the extension. That could leave millions of Americans scrambling to meet their financial obligations in the meantime.
It’s also unclear what taxpayers who received unemployment benefits in 2020 should do about their 2020 tax return. The IRS has not yet indicated how people who already filed their taxes should amend their 2020 return to reflect the partial tax break—or how people who haven’t filed yet should account for the tax break.
Are The Expanded Unemployment Benefits Enough?
One big question remains: Will this round of aid be enough to cushion American workers’ finances until the job market recovers?
U.S. gross domestic product—a major indicator of economic health—is expected to return to pre-pandemic levels by the middle of 2021, according to projections by the nonpartisan Congressional Budget Office. If the employment situation improves drastically over the summer as vaccinations increase and employers can hire with confidence, Congress may not feel a need to pass any further stimulus packages.
If the unemployment rate, which now sits at 6.2%, doesn’t bounce back in line with the vaccination rate and overall economic recovery in the U.S., it could create dire circumstances for more than 9 million out-of-work Americans. The U.S. economy had 10 million fewer jobs this January than it did in February 2020, according to analysis by the Center on Budget and Policy Priorities.
The National Employment Law Project, a nonprofit that promotes policies that support workers, was critical of the timeline set by this stimulus package.
“The view that everything will be back to normal come September is not only willfully ignorant but also cruel,” wrote executive director Rebecca Dixon in a press release. Taking a short-term view to extend benefits, she said, fails to care for people across the country who may still be struggling to secure employment six months from now.
How $100 Delayed the Senate Vote
The already-close Senate vote on the third stimulus bill was derailed for more than 10 hours on March 5 by one man: Senator Joe Manchin, a centrist Democrat from West Virginia.
Manchin had been critical of giving too much direct aid to Americans through this round of stimulus funding, stating it could keep people from returning to work, and wanted to target payments like stimulus checks as closely as possible to people most in need of an economic boost—namely, those with lower incomes.
While the version of the stimulus bill passed by the House of Representatives included a $400 weekly federal unemployment benefit supplement through August, Manchin resisted that amount. For several hours, Manchin considered supporting a Republican amendment that would end a $300-weekly unemployment benefit extension in July.
But Manchin eventually agreed to a Democratic proposal to continue the current $300 weekly benefit through Sept. 6, along with the tax break on some unemployment income earned in 2020.
“The president has made it clear we will have enough vaccines for every American by the end of May and I am confident the economic recovery will follow,” he said in a statement on March 5. “We have reached a compromise that enables the economy to rebound quickly while also protecting those receiving unemployment benefits from being hit with [an] unexpected tax bill next year.”
Manchin also supported a $300 weekly unemployment supplement during negotiations for the second stimulus bill passed in late December. The CARES Act, the original coronavirus aid package, offered $600 per week on top of state benefits, but expired in July.
West Virginia was among a few states that led the way for vaccinating their populations—by mid-January, the state had vaccinated 9.3% of residents. But West Virginia has a small population compared to other states—out of 50, it ranks 39th.