Biden administration calls on states to use stimulus funds for unemployment aid after expiration

·Reporter
·3 min read

The Biden administration is calling for states with high unemployment to use leftover stimulus funds to extend key pandemic-era unemployment programs that are set to expire in early September.

"Even as the economy continues to recover and robust job growth continues, there are some states where it may make sense for unemployed workers to continue receiving additional assistance for a longer period of time, allowing residents of those states more time to find a job in areas where unemployment remains high," Secretary of the Treasury Janet Yellen and Secretary of the Department of Labor Martin Walsh wrote in a letter to congressional leaders. "The Delta variant may also pose short-term challenges to local economies and labor markets."

States can use leftover funds from the $350 billion included in the American Rescue Plan for state, local, and tribal governments to extend benefits for unemployed workers by providing additional weeks of aid to those whose benefits expire and to those who don't qualify for regular state unemployment insurance programs, according to the letter.

The Pandemic Unemployment Assistance (PUA) program provides benefits for workers who don’t normally qualify for regular unemployment, and the Pandemic Emergency Unemployment Compensation (PEUC) program provides extra weeks of benefits. Both expire on September 6.

US Treasury Secretary Janet Yellen meets President Joe Biden in the Oval Office of the White House in Washington, DC, on January 29, 2021, for talks on the economy. (Photo by Nicholas Kamm / AFP) (Photo by NICHOLAS KAMM/AFP via Getty Images)
US Treasury Secretary Janet Yellen meets President Joe Biden in the Oval Office of the White House in Washington, DC, on January 29, 2021, for talks on the economy. (Photo by NICHOLAS KAMM/AFP via Getty Images)

Those funds can't be used to extend the additional $300 weekly bonus, which also expires at the same time, according to the letter.

"As President Biden has said, the boost was always intended to be temporary and it is appropriate for that benefit boost to expire," the letter read.

The pandemic-era unemployment programs were last extended by the $1.9 trillion American Rescue Plan, which was enacted in March.

The Labor Department will communicate with the states on how they can use the funds and states will be able to choose whether to participate.

A man walks by a
A man walks by a "Now Hiring" sign outside a store on August 16, 2021 in Arlington, Virginia. (Photo by OLIVIER DOULIERY/AFP via Getty Images)

Twenty-six states have already cut off the extra $300 in weekly benefits this summer before the federal expiration, while 22 also canceled the PUA and PEUC programs. All but one state had GOP governors who blamed the unemployment programs — specifically the extra $300 of weekly benefits — for labor shortages.

If the pandemic-era unemployment programs aren't extended, approximately 7.5 million jobless workers will be left with no benefits in early September, according to an analysis by the Century Foundation. They will join 4 million unemployed workers who already lost some or all of their benefits in June and July after those 26 states opted out of federal programs early.

The pandemic unemployment benefits have been extended three times during the pandemic and have delivered a total of more than $800 billion to families. No federal extension of the programs is included in the current infrastructure legislation moving through Congress.

"While it’s disappointing that the Biden administration did not call on Congress to extend the critical programs... the announcement is nonetheless a positive step forward," Andrew Stettner, an unemployment insurance expert and senior fellow at The Century Foundation said in a statement. "The administration today called on states to use American Rescue Plan funding intended for state fiscal relief to financially support the long-term unemployed, especially in states with still high unemployment rates."

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