Wisconsin residents receiving an additional $ 300 in weekly unemployment benefits will be asked to repay the money when Congress passes new laws to replace unemployment benefits created by President Trump’s executive action last month.
Work and unemployment experts fear this could confuse many unemployed Americans if the money Trump ordered is already late and Congress hasn’t passed a new bailout package for the unemployed. Some lawmakers say Americans are unlikely to get any more financial relief before November.
If Republicans and Democrats agree to new aid in the future, unemployed people claiming the federal benefit could be seen as a double immersion: they would be paid retrospectively by the new legislation even though they were already paid through Trump’s executive action.
“All this confusion only leads to more administrative burdens at a time when people can get by for longer without social benefits, the standard of living is falling and poverty rises after millions have lost their jobs through the pandemic through no fault of their own,” says Heidi Shierholz. Senior Economist and Director of Policy at the left-wing Economic Policy Institute.
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A spokesman for the Wisconsin Department of Workforce Development said the state is following directions from the Federal Emergency Management Agency, which funds Trump’s Lost Wages Assistance program, and the Department of Labor. However, FEMA said states are administering the program while the agency provides the funds.
It is still unclear how widespread this is beyond Wisconsin. Colorado, Indiana, Georgia, Iowa, Alabama, Idaho, Arizona, Arkansas, Hawaii, Alaska, and Nebraska all said they do not advise recipients to return the money.
The Louisiana Workforce Commission announced it would oversee Congressional legislation, adding that it would ensure that future guidelines are followed as reported by the Department of Labor.
The $ 300 weekly benefit is retroactive for qualified workers through August 1st. The Wisconsin DWD does not believe it will be forced to reclaim help from claimants, although its own website relayed the warning to unemployed residents trying to file unemployment claims.
It remains unclear whether future congressional aid will be retroactive to August 1, which means payments would overlap, a spokesman said.
The DWD expects that if Congress passes new laws, it will begin the expiry of Trump’s lost wage aid program for the week ending September 5 so that there is no overlap, they added.
Still, a potential overpayment problem threatens to cause problems in other states outside of Wisconsin if Congress allows backward payments to overlap, experts say. States could count on how to get the money back if people are overpaid, they warned.
“There is a high likelihood that Congress will backdate a new aid program, creating problems for states that have already distributed money from the lost wage assistance program,” said Andrew Stettner, unemployment expert and senior fellow at The Century Foundation, a think Tank.
“If Congress does not address this in a new bailout package, there would be an overpayment situation for many unemployed Americans across the country that would need to be resolved,” he added.
“Nightmare” scenario for unemployed Americans
Michele Evermore, senior researcher and policy analyst with the National Employment Law Project, feared something like this could happen as states rushed to launch Trump’s Lost Wage Assistance Program when it was passed in August. The program replaces the US $ 600 unemployment supplement that expired at the end of July.
“This would be a nightmare for unemployed Americans and government unemployment systems if people were forced to return the money,” says Evermore. “Wisconsin isn’t necessarily wrong when it comes to sharing a disclaimer. It’s worth letting people know that this temporary benefit is uncertain.”
In August, President Trump called for federal government-funded unemployment benefits of $ 300 per week for workers unemployed due to the pandemic after talks on coronavirus aid stalled in Congress.
Trump directed FEMA to run the $ 300 weekly relief program through its Disaster Relief Fund, which would be capped at $ 44 billion. It should be until December. However, experts estimate that states will run out of funds in about five or six weeks from early August, threatening to leave unemployed Americans without additional aid within weeks after Congress passed another bailout package this month.
And some states, including Arizona, Missouri, and Montana, have already used up the funds. And Texas said Wednesday that the extra $ 300 payout for the week ending September 5th would expire.
The most recent failed attempt to reach a deal in Washington may have been the last opportunity for lawmakers to reach an agreement on a stimulus plan ahead of the November elections. Some economists say the decline in aid could spell problems for household spending, which account for more than two-thirds of US economic growth.
Almost 30 million Americans receive unemployment benefits, according to the Department of Labor. Government unemployment programs only cover about 41% of lost wages, data from the Brookings Institution shows.
“Some people cannot cover their basic needs with regular government benefits. It will only be more difficult until the economy recovers, “says Stettner.” People could be forced to make more drastic decisions, either robbing their 401 (k) s or selling their homes, leading to greater inequality in America. “
Almost all states except South Dakota have applied for funding through FEMA. So far, at least 22 of them have started withdrawing the money.
States cannot usually pay for unemployment insurance that is not approved by Congress. As a result, they had to reconfigure their systems to redistribute the funds, resulting in long delays.
Wisconsin, a major swing state in the U.S. elections, has been approved to provide an additional $ 300 per week of federal aid for three weeks to those unemployed due to lost wages due to the pandemic. Further funding weeks are then set on a weekly basis.
But the state warned last week that it could take eight weeks to reprogram the state’s unemployment system to pay out the funds.
States have no guidance without new legislation
The U.S. Department of Labor guidelines indicate that the Trump administration’s lost wage assistance program must end if Congress passes new laws providing for additional unemployment benefits, including the extension of the pandemic unemployment compensation program that expired in July.
The question of whether people have to return the money provided by Trump’s program, however, cannot be answered until new laws provide guidelines, according to the Labor Department.
In essence, the federal government is saying it has not yet determined how any overpayments will be repaid through the program. According to Victor Forberger, a Wisconsin lawyer specializing in unemployment cases, this has left the door open to states like Wisconsin to interpret how the money can be recovered.
“Wisconsin has made an administrative interpretation, contrary to what the law allows,” argued Forberger, who added that the state is “very aggressive” when it comes to recouping overpayments.
To be sure, it is possible that Wisconsin may transgress its authority, some experts argue, as the current statement does not contain anything that would allow states to require people to repay loss-wage assistance.
The Department of Labor ordered the US TODAY to contact FEMA for comment.
“FEMA is providing the funds that states are administering the program,” FEMA told the US TODAY in a statement emailed to it. “FEMA has no way of knowing whether people are entitled to or benefit from lost wages. Eligibility is determined at the state level. “
How people could return the money
It’s unclear how people would pay the money back, but there are several different ways that this could be done.
If Congress passes a new unemployment improvement program, federal backdated payments could be reduced to cover overpayments, Shierholz says. Or they could be paid in full under the new program but have to pay back what they owe, she added.
Featuring: Brent Schrotenboer and Charisse Jones
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