Aug 21, 2020 - 2:45pm

Trump Offers UI Buffer, Congressional Action Still Needed


Special Assistant to the President

On Saturday, August 8, President Trump signed four Executive Orders addressing unemployment insurance, payroll taxes, evictions, and student loans. According to President Trump, the Executive Orders were a direct response to Congress’s stalemate over a Phase IV deal. One reason for the stalemate was a failure to agree on extending Federal Pandemic Unemployment Compensation (FPUC) payments—the $600 per week federal top up of state UI benefits.

Trump’s Executive Order on UI essentially replaced FPUC with the Lost Wage Assistance Program (LWA), which in practice extends and reduces the federal supplement to $300 per week. This compensation will be funded through FEMA’s Disaster Relief Fund (DRF). At first, states were required to provide a 25% match, or an extra $100 per week to each UI claimant. After multiple states pushed back on this requirement, the contribution requirement was effectively dropped. Now, any individual receiving at least $100 per week in regular UI benefits can receive the $300 top up, as long as the state applies for and is approved to participate in the LWA program. States still maintain the option to provide an extra $100 per week to claimants through unused CARES Act funds, although few have done so thus far.

The LWA program is available for weeks of unemployment ending August 1, 2020, until December 6, 2020, or when Congress acts, whichever is first. More importantly though, the program will be terminated once the DRF runs out of the allotted $44 billion dollars, which is expected in 5-6 weeks.

The newly structured federally funded UI supplement will assist individuals whose jobs have been lost due to the pandemic, and by reducing the amount of the supplement, it should reduce the incentives to refuse suitable work. However, an Executive Order is no substitute for Congressional action, and ultimately Congress will need to resolve the issue before the LWA program comes to a halt.

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Special Assistant to the President