Why a 70% Wage Replacement Bill Won't Cut It

Opinion Column, By Jessica Myles, UnemploymentPUA.com Contributor

The next week we receive the extra $600 FPUC added to our unemployment benefits will be the last. This extra money was a blessed and necessary booster to our weekly check, and many of us rely on it to support and sustain our families, as the compensation we receive from regular UI is minuscule, hardly enough to pay our rent and bills and put food on our families' table.

A proposed bill to replace the FPUC is a 70% wage replacement bill. For background, right now regular Unemployment Benefits (excluding the $600) are generally a percentage of your wages, often calculated by how much you earn in your highest earned quarter prior to becoming unemployed. The exact calculations vary by state but it usually ends up being around 50% of your salary. However, this number is also capped, in some states it is capped very low, for example in Mississippi, the maximum weekly amount is $235 per week, and in Arizona the max is $240.

A 70% wage replacement bill would override those caps to potentially give us a higher benefit amount than what we would get under regular UI. Under the new proposition, we would be getting 70% of our weekly wages as the weekly benefit amount.

Let's first look at the justification for why proponents of such bill support it. First off, it is more than what we would usually get from unemployment. As explained above, we would generally be getting 50% or less of our wages from regular UI. But with the proposed bill, we would get 70% of our wages which is a significant increase.

Another argument for such bill, which is popular around Washington nowadays, is that the $600 FPUC was too much and it discouraged people from returning to work. With the $600 added to the weekly benefits, many people made MORE while unemployed than when they were employed. Let's take for example John Smith, a retail store clerk working for $400 a week. And let's assume John is eligible for $200 under regular unemployment benefits. If we add the $600, John gets $800 per week which is double his salary. What incentive does John have to return to work when he can make double just by sitting home?

While those would be valid points to make during normal circumstances, it is my opinion that these arguments do not really fit well while the Pandemic is still going on strong. Here are my points AGAINST such a bill and FOR an extension or similar legislation to the $600 FPUC:

For many minimum wage workers, 70% of the wages is not enough to survive on

The minimum wage system is in place to guarantee workers are not abused with low salaries and have enough to live on and support their families. It is a low amount as it is and is debatable on whether or not it is enough, with many wanting to increase the minimum wage. So if minimum wage is barely enough to survive on, how would one survive on LESS than minimum wage? 30% less, according to the proposed bill. This is just not sustainable.

In many households, more thane one member of the family is unemployed

With the Coronavirus decimating so many businesses and jobs, it is not uncommon for all members of the household to be unemployed. So if we take for example a family of 5 with both mother and father who worked on a minimum wage and are now BOTH unemployed and BOTH losing 30% each of their salary. How will they provide for and feed their children?

Schools are not reopening so there is going to be a problem with childcare

In many states, schools are not scheduled to fully reopen, instead switching to remote learning. So in the example above of the family of five with 3 kids, even if there were jobs available for both parents, only one of them could work because the other has to stay home with the kids, or they would have to pay for expensive childcare.

Not enough jobs available

While the economy is attempting to re-open, recent spikes in Covid-19 cases are causing this re-opening be sluggish, with many business shutting down again. As such, even without the $600 "Disincentive" to work, there just isn't enough jobs available for all those who seek to return to the workforce.

My suggestion

I propose that it is necessary to extend the $600 as is. And as more jobs become available, this amount can be gradually decreased based on the status of how the re-opening of the economy and the job market is doing. Such legislation would allow families to keep surviving financially while adapting to the economic situation and adjusting the weekly amount accordingly.
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