U.S. Sent Workers Nearly $250 Billion in $600-a-Week Jobless Aid

A cook who lost her job in March washed vegetables from her garden last month in Grand Blanc, Mich. The state received the most benefits relative to its pre-pandemic labor force.

Photo: Elaine Cromie for The Wall Street Journal

The federal government spent nearly $250 billion on extra $600-a-week unemployment benefits from early April to the end of July, the Labor Department said, as millions of workers were laid off because of the coronavirus pandemic.

Workers who permanently lost their jobs, were furloughed or had their hours cut were able to tap $600 in federal unemployment benefits on top of the amount they qualified for from the state, under a relief law Congress passed and President Trump signed in March.

The benefits expired on July 31. Mr. Trump on Saturday signed an executive order that would replace the larger payments with $300 a week in enhanced unemployment benefits, and called on states to provide another $100 a week. The White House remained deadlocked Monday over a broader pandemic relief deal with Democratic lawmakers, who said the president’s moves over the weekend were an unconstitutional breach of congressional spending powers.

Individuals tapping regular state programs, the largest source of benefits, at the beginning of August saw weekly payments decline to near the $332 average weekly payment made under those programs in the past year. Self-employed and gig workers—who don’t usually qualify for unemployment assistance—saw a steeper decline in payments.

The $600 payments, known as Federal Pandemic Unemployment Compensation, were paid out to states starting the first full week of April. The peak week for payments came the week that ended June 26, when $18.6 billion was distributed, according to Labor Department data requested by The Wall Street Journal. That equates to about 31 million $600 payments that week, though a Labor Department spokeswoman said weekly amounts might include back payments.

California received the largest total amount, $38.4 billion, and South Dakota received the least, $177.1 million, according to the Journal’s analysis.

Michigan received the largest amount of benefits when adjusting for the size of the labor force in February 2020, before the pandemic took hold in the U.S. The state received $2.9 million per 1,000 workers in the state. It was followed by New York and Pennsylvania. Nationally, about $1.5 million in benefits were paid per 1,000 workers, counting both the employed and unemployed.

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Michigan was among states with the most unemployment applications in March and April when auto-factory shutdowns rippled through the manufacturing-heavy state. Those plants have since been allowed to reopen.

The enhanced benefits helped prop up households that lost jobs as well as the broader economy, economists have said. Despite a historically high unemployment rate, household income in June was above the level it was in February, before the pandemic had spread widely in the U.S., according to the Commerce Department. The increase in unemployment insurance payments more than offset the decrease in wage and salary income.

Some Republicans and conservative economists say the benefits, which in many cases pay workers more than they earned at their former jobs, is a disincentive to returning to work.

A study published last month by Yale University economists found that workers with more generous jobless benefits didn’t experience larger employment declines when the benefits took effect and that they have returned to their previous jobs at similar rates as others.

Michael Strain, an economist at the right-leaning American Enterprise Institute, said the $600 benefits likely didn’t dissuade many from returning to work this spring, when wide swaths of the economy were closed. But he said maintaining benefits at that level until next year, as House Democrats proposed, would discourage Americans from rejoining the labor force as the economy begins to recover from the pandemic.

“It’s not reasonable to pay workers more in unemployment benefits than they make at their jobs,” he said. “Doing so would keep the unemployment rate high longer than it should be.”

Alix Gould-Werth, director of family economic security policy at the left-leaning Washington Center for Equitable Growth, said the $600 payments succeeded in propping up consumer spending and allowing Americans to buy groceries and pay rent.

She is skeptical that smaller additional payments of $300 or $400 a week would be as effective. She projected those payments wouldn’t arrive until September and expects the emergency funds Mr. Trump directed to be used for such benefits would be exhausted in about five weeks.

The federal government spent an average of $16.6 billion on the $600 enhanced benefits in the last four weeks of July, according to the Labor Department data. Renewing benefits at half that rate, or about $8.3 billion a week, would exhaust the $44 billion Mr. Trump allotted in under six weeks.

“The reduction in benefits will hurt workers, particularly low-wage workers and workers of color,” Ms. Gould-Werth said.

Claudia Peterson tapped the unemployment benefits, including the extra $600, during two furloughs from Wallis Annenberg Center for the Performing Arts in Beverly Hills, Calif. Ms. Peterson, who remains unemployed, said through last month the combination of federal and state benefits roughly replaced her wages as a technical director at the theater. That allowed her to keep up with rent and order food from restaurants as she sought to support local businesses.

Now that the benefits have expired, she said she asked her landlord to defer rent, but the landlord, an individual, is unable to get a deferral on the mortgage, Ms. Peterson said. An additional benefit of $300 or $400 a week would keep her financially afloat, she said, but isn’t enough to allow her formerly self-employed roommate to make rent. The 29-year old added she isn’t optimistic she would receive such an enhanced payment before her rent is next due.

“I don’t feel very secure. At this point I’m trying not to spend any money,” Ms. Peterson said. “I’d love to work, but there’s not any work to be had.”

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Write to Eric Morath at [email protected]

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