Many thousands of out-of-work Americans never got $600 checks

Catarina Saraiva, Shawn Donnan and Reade Pickert

With millions of Americans set to lose $600 a week in extra federal unemployment benefits – an economic lifeline during the pandemic – many thousands have yet to receive that money.

State unemployment agencies have been so swamped with claims that more than $100 billion of benefits owed still haven’t been paid, according to Bloomberg calculations based on Treasury and Labor Department data.

Motorists take part in a caravan protest asking for the extension of the $600 in unemployment benefits to people out of work because of the coronavirus in New Orleans, La. Wednesday, July 22, 2020.

Those billions should eventually be distributed – even if Congress doesn’t act to extend the benefits, set to expire on July 31. But the delays underscore the magnitude of the nation’s jobless crisis, as well as the daunting bureaucratic challenges of coping with it.

Some out-of-work people have received only part of their promised benefits. Morgan Johnson, a single mother in Pennsylvania, said her extra benefits were halted because of suspected fraud. Calls to state agencies were met with busy signals. She hasn’t been paid in six weeks and, she says, is on the verge of “losing everything.”

Payments Owed

“It feels unbelievable, it feels so surreal,” said Johnson. “There are no end results that you can expect or look forward to. This is just not right at all.”

The Treasury disbursed about $323 billion in unemployment benefits between the beginning of March and July 18, according to its daily statements. While a historic figure, the payout falls short of the total bill that should have reached an estimated $428 billion, according to Bloomberg calculations based on weekly unemployment filings and the average size of those claims.

The U.S. Department of Labor has previously said that using its weekly claims report, which delineates those filing for continuing benefits each week, was “not an effective data point to get at unpaid claims.” But with many states struggling to deal with an overload of claims – now rising again – and national data still scant, the estimate gives a picture of the total bill facing the nation.

Changing Formula

Senate Majority Leader Mitch McConnell is expected to release a $1 trillion pandemic-relief proposal on Monday, kicking off talks with Democrats on provisions including money for people who’ve lost their jobs and protections for employers reopening their businesses.

Democrats want to continue the flat $600 a week supplemental payment, while Republicans are arguing for a system that would cap benefits at 70% of lost wages, to curb the amount of workers who are making more on unemployment than at work.

This week, unemployed Americans receiving benefits are scheduled to see their last extra payment unless Congress acts. The added bump to state-based help almost triple recipients’ benefits on average and is credited by some economists as a factor in keeping the economy at least somewhat afloat amid the pandemic.

State Delays

State unemployment offices, normally set up to handle jobless claims in the thousands, are still working through backlogs of filings – some numbering in the millions. They’re now also bracing for more issues, depending on what Congress decides.

Representatives for state offices in Hawaii and Arkansas said they expect minimal disruptions to their process if lawmakers extend the $600 or lower the weekly figure to $200 or $400, for example. But shifting to a formula based on prior wages will be more difficult.

“If the change is to calculate an amount from the base period wages or some other method, then the effort will take weeks,” said Zo Calkins, a spokeswoman for the Arkansas Division of Workforce Services.

The backlogs already have driven frustrated claimants to social media, using hashtags such as #SaveThe600 and #ExtendUI and creating Facebook groups with thousands of members.

Covid Patient

As politicians in Washington debated what to do last week, Craig Barnette was tracking the discussions from his bed at the Mayo Clinic in Jacksonville, Florida, where he was coming to the end of treatment for Covid-19 and wondering how he was going to cover the hospital bill.

Barnette, a professional drummer with the southern roots band J.J. Grey & Mofro, received one $1,200 check covering two weeks of federal benefits on May 19 and a few payments of the $115 per week state benefit he is owed. But the payments stopped soon after that and he never received any of what he was owed for the months of March and April or anything else since, all of which he estimates to total nearly $10,000.

“There’s no rhyme or reason to anything and it’s next to impossible to connect with an actual person” to get help, he said.

The added benefit is expiring as the labor market remains fragile. Although ongoing claims for unemployment benefits have fallen, the drop has slowed in recent weeks and even reversed in states experiencing a resurgence in the virus.

Other data, such as restaurant bookings, credit-card spending by JPMorgan Chase & Co. customers and consumer sentiment have declined or stalled.

Without the boost, three weeks of average benefits barely cover the median rent cost of $1,058 per month. A federal eviction moratorium also expired this month, setting unemployed Americans up for a potential double whammy of past-due rent payments and drastically reduced unemployment benefits.

“It is absolutely providing just a crucial lifeline to millions and millions of people,” said Heidi Shierholz, senior economist at the Economic Policy Institute and former chief economist at the U.S. Department of Labor. “But at the same time, there just have been – and we all know this – just a huge amount of issues with getting those benefits to many, many people.”