Finance

Yellen, Walsh rule out extension of pandemic jobless aid

Treasury Secretary Janet Yellen answers questions during a Senate Appropriations Subcommittee hearing to examine the FY 2022 budget request for the Treasury Department on Wednesday, June 23, 2021.
Greg Nash

Treasury Secretary Janet Yellen and Labor Secretary Marty Walsh said Thursday that the Biden administration will not seek an extension of pandemic jobless aid programs but encouraged states to use funding from the $1.9 trillion stimulus package to support unemployed workers.

In a Thursday letter to congressional leaders, Yellen and Walsh said it is “appropriate” for a $300 weekly boost to unemployment insurance and other expanded benefits programs to expire as scheduled on Sept. 6.

“The temporary $300 boost in benefits will expire on September 6th, as planned. As President Biden has said, the boost was always intended to be temporary and it is appropriate for that benefit boost to expire,” Yellen and Walsh wrote to Senate Finance Committee Chairman Ron Wyden (D-Ore.) and House Ways and Means Committee Chairman Richard Neal (D-Mass.).

“In addition, President Biden believes that the conditions exist in many states such that the other emergency UI [unemployment insurance] programs … can end on the date set in the American Rescue Plan,” they continued, referring to the $1.9 trillion stimulus bill Biden signed in March.

The March stimulus bill extended the $300 weekly supplement, the Pandemic Unemployment Assistance program for gig workers and contractors and Pandemic Emergency Unemployment Compensation — which provides up to 53 weeks of additional aid — through Labor Day. 

Roughly 7.5 million jobless workers will lose all of their unemployment aid after when those programs expire and millions more will receive substantially less without the $300 federal supplement.

Yellen and Walsh wrote that the “tremendous progress” of the labor market since March warranted the end of the pandemic unemployment aid nationwide. Twenty-six states, all but one governed by Republicans, have already pulled out of the federal jobless aid programs in a bid to push more residents into available jobs.

Even so, the secretaries acknowledged that some states and cities may still need the expanded federal safety net as the delta variant causes COVID-19 cases to surge and impede the economic recovery.

“There are some states where it may make sense for unemployed workers to continue receiving additional assistance for a longer period of time, allowing residents of those states more time to find a job in areas where unemployment remains high,” they wrote.

Yellen and Walsh encouraged states to use part of their slice of $350 billion in state and local aid included in the March stimulus bill to fund supplements to unemployment benefit amounts, which are determined individually by each state, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.

The Labor Department will also soon release guidelines for how states can incorporate state and local aid into their unemployment systems “to more seamlessly provide support to unemployed workers, while complying with existing federal law and regulations.”

The letter from Yellen and Walsh effectively closes the door on progressives’ long-shot hopes for an extension of the jobless aid programs. Even if Biden had backed a bill, it would have likely died in the Senate, where all Republicans and at least one Democrat — Sen. Joe Manchin (W.Va.) — would oppose it.

Advocates for expanded unemployment aid say that while the economy may be improving, the pandemic illustrated the need for wide-scale improvements to the federal aid system. Dozens of state unemployment offices run through antiquated computed systems crumbled under the rush of applications, including several fraud schemes that likely sucked up millions of dollars.

“Beyond the immediate issue of expiring benefits, President Biden believes that the pandemic has exposed serious problems in our UI system that require immediate reform. Accordingly, he is calling on Congress to take up the issue of long-term UI reform as part of the reconciliation process, when Congress returns from recess,” Yellen and Walsh wrote.

In a statement responding to the letter, Wyden touted the success of the stimulus bill and praised the Biden administration for backing major reforms to jobless aid, one of his top priorities. 

“If we finally bring unemployment insurance into the 21st century, there won’t be the same drastic need to temporarily patch the system in midst of the next recession,” Wyden said. 

Tags American Rescue Plan Act CARES Act Janet Yellen Joe Biden Joe Manchin Marty Walsh Richard Neal Ron Wyden Unemployment
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