The federal-state unemployment insurance program provides cash stipends to replace part of the wages for people who have temporarily lost their jobs. Recently, the federal government announced additional aid for unemployed workers who have depleted their regular benefits. The payments are designed to help the jobless pay their bills during this period of high unemployment. Here is what to know about the extension of these benefits:


Anyone who was laid off and is actively looking for employment can access unemployment benefits. As such, people who resigned or were fired are not eligible for funding. On the other hand, extended benefits will start only after an individual has exhausted their normal unemployment insurance benefits. Not everyone who was eligible for regular payments will qualify for the extended benefits. Because individual states are responsible for administering the payments, they will advise on your eligibility for the supplementary benefits.

The duration of the program

In response to the COVID-19 pandemic, the CARES Act required all states to provide 13 additional weeks of unemployment benefits. In states with high unemployment, this would be followed by funds under the Extended Benefits program for up to 13 or 20 weeks depending on state laws. When you exhausted funds from the extended coverage under the Pandemic Emergency Unemployment Compensation (PEUC) program, you could still receive benefits under the Pandemic Unemployment Assistance (PUA) program. Regardless of where you live, you would expect to receive unemployment coverage for a total of 39 weeks.

The Lost Wages Assistance plan

The CARES Act, which provided for 13 additional weeks of unemployment compensation, expired in July. President Trump then signed an executive order that authorized federal jobless aid. The Lost Wages Assistance plan provides an extra $300 for up to six weeks as opposed to the three weeks initially proposed by FEMA. This means that jobless workers will receive a total of $1,800 in extra benefits over the period. However, the amount under this assistance program is still less than the $600 weekly benefits under the CARES Act.

The impact of the extension

The extension of unemployment benefits is likely to have a huge economic impact. As of July 18, a total of 32.1 million Americans were receiving unemployment benefits. By August 6, the country had seen more than one million people filing for jobless benefits each week for 20 consecutive weeks. Without the benefits extension, the jobs created over the next year would be 5.1 million fewer. The unemployment compensation will not only cushion workers against immediate job loss but also help jumpstart the economy.

What happens when the benefit year ends?

There is no telling how long the high levels of joblessness will persist for. In the event that it carries on into the next year, most workers will have depleted their benefits. The long spell of joblessness may see people receiving much less aid or be deemed ineligible for the benefits. This is because states usually use an individual's previous earnings to calculate their unemployment compensation. The good news is that lawmakers are expected to pass a law to prevent a reduction in the benefits.

Unemployment compensation ensures that jobless people have more money to spend, a factor that creates demand and helps to stimulate the economy. The downside is that these payments contribute to increased budget deficits and government debt. As such, the government should work towards sustainable economic recovery in the long run.

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