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What the Child Care Community Needs to Know about Unemployment Insurance in the CARES Act

As the nation grapples with the economic impacts of the coronavirus, Congress has passed the Coronavirus Aid, Relief and Economic Security Act, or CARES Act, to provide relief for both individuals and businesses. As we have detailed, the CARES Act provided both support for the child care market specifically, and relief for small businesses, including child care providers, more broadly. These supports are critical to ensuring child care providers are able to stay afloat throughout this crisis and beyond, and that working parents who are on the frontlines of responding to the coronavirus pandemic can access the child care they need.

While these supports will be helpful to providers who are able to stay open, many businesses around the country, including child care businesses, have been forced to close their doors in response to the coronavirus. In addition to mandatory closures of their own business, child care providers face this crisis on another front: parents of young children who typically rely on child care in order to work are home and not in need of their services for the foreseeable future. In a recent NAEYC survey of child care providers, 49% said they are losing income and nearly the same amount (46%) said they would not survive a closure of more than a month. This will have huge impacts on the child care workforce –many individuals will be laid off, let go, and might not have a job to return to once broader parts of the economy start to open up and rely on child care once again.

Importantly, the CARES Act recognizes a large portion of the population will be unable to work for the foreseeable future. Specifically, Congress both expanded existing unemployment benefits for workers who become unemployed due to the coronavirus and created a new Pandemic Unemployment Assistance program, which provides assistance to individuals who would not traditionally be eligible for unemployment (self-employed, independent contractors, those with limited work history, and others) but are unable to work due to the coronavirus. Both of these programs will be critical for the child care workforce to understand during these uncertain times.

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Unemployment Insurance

For more detailed information on UI in the CARES Act, including program requirements, eligibility, and resources for how to access your own state’s unemployment benefit website, please click here.

Unemployment insurance, administered jointly by the state and federal government, provides cash benefits to eligible workers who are unemployed. Each state administers a separate unemployment insurance program, meaning states determine eligibility, minimum and maximum assistance, and duration of benefits. The CARES Act continues this structure, meaning individual benefits for those who may receive assistance under their state unemployment program will continue to vary. However, regardless of state, an additional $600 per week in temporary federal Pandemic Unemployment compensation will be added to an individual’s weekly benefit amount.

The temporary Pandemic Unemployment Compensation program provides unemployment benefits to those who are not eligible for existing state programs and are unable to work for reasons related to COVID-19. This includes those who have been diagnosed with or exposed to COVID-19, those with related caregiving responsibilities, and self-employed individuals or independent contractors. The Pandemic Unemployment Compensation program will fund states to pay these workers both a base benefit based on earnings and rules from their state as well as the $600 weekly supplement.

Short-Term Compensation for Reduced Work

Additionally, CARES includes provisions that may help a large number of workers who are not laid off, but who have had their hours reduced due to the coronavirus. In these cases, states may offer Short-Time Compensation programs, which allow employers to enter into an agreement with state labor departments to reduce hours instead of laying people off entirely. Eligible workers are then eligible to receive partial unemployment benefits to help fill the gap. Currently, 27 states have STC programs, which are completely funded by state, but under the CARES Act, the federal government would temporarily provide funding for states interested in operating such programs for impacted workers.

Conclusion

Last week, nearly 3.3 million people filed for unemployment insurance—by far the largest on record for a single week, significantly surpassing the record of 700,000 set in 1982. It is important to note that this increase in applications is going to place a significant strain on the ability for states to efficiently process claims and provide assistance expeditiously. Adding the programmatic changes made by the CARES Act, it might very well take states several weeks to get their systems working effectively.

As child care providers are forced to close in attempt to curb community spread of the coronavirus, and as the broader economy comes to a pause and more parents are home with their children, the reliance on the child care market will be significantly curtailed. The unemployment benefit expansions Congress included in the CARES Act will help the child care workforce through these trying times.

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