The Next Unemployment Insurance Cliff: Expanded Eligibility and Extended Time

Large portions of the workforce are normally ineligible for UI, including self-employed workers, independent contractors, gig economy workers, and those who choose to only seek part-time work. Additionally, while eligibility for UI varies by state, generally only people who lose their job through no fault of their own can claim benefits, and workers must also meet wage and work-history qualifications. These restrictions render the regular UI system ill-equipped to handle the COVID-19 crisis. For example, UI does not cover workers who are sick or requiring self-quarantine from COVID-19. Those who have had additional caregiving responsibilities due to school or child care closures are similarly excluded from UI.

PUA fills these gaps in the UI system, providing up to 39 weeks of benefits to workers left out of regular UI, including those who have been furloughed or those who quit their jobs for reasons related to COVID-19. In some cases, PUA’s expanded coverage serves as a public health measure, enabling those who are sick or requiring self-quarantine from COVID-19 to stay home. Workers whose place of work is closed due to stay-at-home order restrictions can also claim PUA, as can those with greater caregiving responsibilities brought on by the crisis. In fact, a BPC-Morning Consult Poll found that 26% of those receiving any kind of UI are primarily spending their time caregiving rather than looking for work.

PUA is largely based on Disaster Unemployment Assistance, which has long been available to workers affected by a major disasters like hurricanes). Yet PUA’s unprecedented scope required states to quickly stand up brand new administrative structures to provide benefits to these expanded populations. Many state systems in turn initially struggled to implement PUA, with millions of claimants waiting weeks—or even longer—to receive benefits. More than 9 million workers are currently collecting benefits through PUA, which is about 2.5 million more than the number of workers collecting regular UI. Even if Congress acts to extend the program, without additional weeks of eligibility, workers who have been collecting PUA since March will run out of benefits by the end of the year.

In most states, regular UI benefits run out after 26 weeks. PEUC provides federal funding to extend these benefits an additional 13 weeks, mirroring the 39 weeks a worker can claim PUA. Over 4 million Americans are currently collecting PEUC, a figure that will likely grow as workers laid off at the start of the pandemic begin to exhaust their regular benefits. Furthermore, the proportion of the unemployed on temporary layoff has dramatically decreased, from 80% in March to 40% in September, which means that most of the remaining displaced workers could be out of work for an extended period of time. Administrative challenges may hamper uptake, however, as states take different approaches to the transition from regular UI to PEUC. Workers often must reapply to access PEUC, which, despite unchanged qualifications between the programs, has resulted in many workers being denied the extension.

Extended Benefits (EB), a permanent UI program, does provide for 13 to 20 additional weeks of regular UI eligibility, but only to workers in states experiencing high unemployment. At present, EB has been triggered in 40 states and the District of Columbia. Workers can access EB after they exhaust PEUC—or in its absence. States and the federal government normally share the costs of this program, but the federal government is currently footing the full cost of EB. Unless Congress acts, this additional federal funding will expire with PEUC at the end of the year.

PUA and PEUC have provided critical financial support to workers and families impacted by COVID-19, but these benefits are set to expire while the economy is still recovering and infections are once again on the rise. Lawmakers should act in a bipartisan manner to avoid a dramatic cliff for the more than 13 million workers who continue to rely on these emergency benefits in the midst of our public health and economic crisis.