Pandemic unemployment benefits were underpaid in most states, government watchdog finds

·Reporter
·3 min read

The majority of states have underpaid jobless Americans who rely on the Pandemic Unemployment Assistance (PUA) program by not adjusting their benefits based on wages. Those workers are entitled to what they missed out on, a government watchdog said on Monday.

“The majority of states have been paying PUA claimants the minimum allowable benefit instead of the amount they are eligible for based on prior earnings,” the Government Accountability Office wrote in a report. “States should pay the difference between the amount previously paid and the amount owed for all weeks of unemployment that an individual files during the Pandemic Assistance Period.”

Currently, more than 9 million of the 20 million workers receiving unemployment benefits rely on PUA, a program available to gig workers, contractors, and the self-employed.

Under the PUA established by the CARES Act, states were allowed to initially approve people for the minimum unemployment benefit. But states are expected to recalculate the benefit amount based on a person’s actual income, if provided documentation, and pay back any difference, according to the Department of Unemployment Assistance rules.

NEW YORK, NEW YORK - NOVEMBER 25: A view of the line as Food Bank For New York City distributes Thanksgiving meals to go at Food Bank Community Kitchen on November 25, 2020 in New York City. (Photo by Michael Loccisano/Getty Images for Food Bank For New York City)
A view of the line as Food Bank For New York City distributes Thanksgiving meals to go at Food Bank Community Kitchen on November 25, 2020 in New York City. (Photo by Michael Loccisano/Getty Images for Food Bank For New York City)

Twenty-seven of the 41 states in the report have been paying within 25% of the benefits minimum, while 10 states have been paying within 10% of the minimum amount. That means many workers in those states are getting the minimum benefit since the average is close to the minimum, according to the report.

The average benefits paid in September were between $114 to about $357 per week, compared with an average of $181 to about $466 per week for unemployed workers on regular unemployment insurance benefits.

“Half the people getting a benefit right now are getting PUA,” Michele Evermore, a senior policy analyst at the National Employment Law Project, told Yahoo Money. “Even if 15 million people lost $1, that's $15 million dollars. Add in the fact that that is probably a whole lot more than $1 for people.”

‘States should pay the difference’

Based on guidance by the Department of Labor, states must recalculate the weekly benefits immediately after they receive “sufficient documentation of wages” from the recipient.

Read more: How to file for unemployment insurance

California is one of the states recalculating the benefit payments based on the claimant’s annual income for 2019 and the difference in pay will “apply retroactively to any weeks,” according to its Employment Development Department.

Both the Pandemic Unemployment Assistance (PUA) and the Pandemic Emergency Unemployment Compensation (PEUC) programs are set to expire on December 26 unless Congress reaches a stimulus deal.
Both the Pandemic Unemployment Assistance (PUA) and the Pandemic Emergency Unemployment Compensation (PEUC) programs are set to expire on December 26 unless Congress reaches a stimulus deal.

“States are starting to try to do the redeterminations. It's a lot to put on a state,” Evermore said. “Hopefully with this report out, they'll move more quickly to establish a more appropriate weekly benefit amount.”

The PUA program, along with the Pandemic Emergency Unemployment Compensation (PEUC) program, is set to expire on December 26, leaving up to 12 million Americans without unemployment benefits unless Congress passes another stimulus package.

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Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova.

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