Analysis: 1 in 3 jobless Americans could be left out of Trump's action on unemployment

Denitsa Tsekova
·Reporter
·5 mins read

President Donald Trump’s memorandum to extend extra unemployment benefits — if it can be carried out — could leave out more than a third of jobless Americans who had been covered by expired government aid.

Three in 10 workers who wouldn’t ordinarily receive unemployment benefits — such as contractors, freelancers, and self-employed workers — may be ineligible for the benefit from the president’s action, according to an analysis of the executive memo and guidance from the Labor Department, even though they got the extra $600-per-week under the CARES Act that expired at the end of July.

About 1 in 16 regular unemployment insurance recipients — mostly low-income earners — also won’t get additional help, according to the analysis from Eliza Forsythe, a labor economist, and professor at the University of Illinois.

The analysis underscores the limits of the president’s ability to single-handedly address one of the most pressing economic issues facing the nation and highlights the need for Congress to act to help those most affected by the coronavirus pandemic.

US President Donald Trump signs executive orders extending coronavirus economic relief, during a news conference in Bedminster, New Jersey, on August 8, 2020. (Photo by JIM WATSON/AFP via Getty Images)
US President Donald Trump signs executive orders extending coronavirus economic relief, during a news conference in Bedminster, New Jersey, on August 8, 2020. (Photo by JIM WATSON/AFP via Getty Images)

“It leaves out the poorest recipients,” said Gbenga Ajilore, a senior economist at the Center for American Progress, a nonprofit for public policy research and advocacy. “This is needlessly cruel because they are already struggling and it increases the difficulty for states to implement the program.”

The White House didn’t directly address those potentially left out of Trump’s executive memorandum when asked by Yahoo Money. But Judd Deere, a spokesman for the administration said: “President Trump acted where no one would to provide relief to the American people. There is no reason this should take months.”

‘Covering only people on regular unemployment insurance’

The memorandum redirects the Federal Emergency Management Agency (FEMA) to create a new program for unemployment insurance using $44 billion in disaster relief funds. The federal government will cover $300 of the benefit, while states can cover another $100 if they choose, potentially totaling $400 in weekly benefits.

Read more: Here’s what you need to know about unemployment benefits eligibility

While the executive memorandum allows workers receiving the Pandemic Unemployment Assistance (PUA) to get the additional benefits, one of the two ways states can allocate funds potentially leaves out these workers, according to a letter the Department of Labor sent on Sunday to state unemployment insurance agencies and obtained by Yahoo Money.

Francis Stallings tapes signs to her car before participating in a caravan rally down the Las Vegas Strip in support of extending the $600 unemployment benefit, August 6, 2020, in Las Vegas, Nevada.(Photo by BRIDGET BENNETT/AFP via Getty Images)
Francis Stallings tapes signs to her car before participating in a caravan rally down the Las Vegas Strip in support of extending the $600 unemployment benefit, August 6, 2020, in Las Vegas, Nevada.(Photo by BRIDGET BENNETT/AFP via Getty Images)

“The memorandum specifically does allow for PUA recipients to get it,” Michele Evermore, senior policy analyst at the National Employment Law Project, told Yahoo Money. “But it might be the case that states would just end up covering only people on regular unemployment insurance.”

That leaves out a good chunk of unemployed people, according to Forsythe’s analysis. PUA recipients account for around 30% of jobless Americans who claim benefits. It’s possible states could reconfigure their unemployment insurance (UI) program to include PUA recipients, but that would be “really difficult to implement,” Forsythe said.

Or “maybe they’ll come back and say the recipients will be able to get the $300 match without the state funding,” Forsythe said.

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‘That’s very little to live on’

Jobless Americans also need to earn at least $100 to get the extra benefits provided by the executive order, a requirement that didn’t exist under the CARES Act. But people making under $100 per week account for 6% of unemployment insurance recipients, Forsythe found.

Unemployed Americans see a drop in their unemployment benefits between 52% to 72% without the extra $600, according to an analysis by Evercore ISI. Graphic: David Foster / Yahoo Finance
Unemployed Americans see a drop in their unemployment benefits between 52% to 72% without the extra $600, according to an analysis by Evercore ISI. Graphic: David Foster / Yahoo Finance

“People that are receiving less than $100 in state benefits will not be eligible for those extra $300 federal benefits,” Forsythe said. “That’s $400 a month. That’s very little to live on.”

Women would be disproportionately affected by the minimum threshold, accounting for 70% of those workers who earn less than $100 a week. Female workers also saw one of the biggest cuts in income after the additional $600 expired because the benefits accounted for a big part of their income.

This comes as over 30 million Americans lost the extra $600 in weekly unemployment benefits at the end of July and have since seen a drop in benefits ranging from 52% to 72%, according to an analysis by Evercore ISI.

“These are the people that were earning the least from the state, so the $600 was going to be a really big top-up for them weekly,” Forsythe said. “Not being able to get those extra $300 will be a big cut to their income.”

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

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