On Thursday, August 19, 2021 the U.S. Secretary of the Treasury and the U.S. Secretary of Labor informed congressional leadership that states could use some of their shares of ARPA funds to further extend expanded unemployment compensation and assistance. Download the PDF here and read the article here. The letter outlines specific steps that the federal agencies are taking.
First, the Treasury Department is re-affirming that states can use their allocations of the $350 billion in American Rescue Plan State and Local Fiscal Relief Funds to provide assistance to unemployed workers, including by continuing to provide additional weeks of income support to workers whose benefits expire on September 6th and to workers outside of regular state UI programs.
Second, the Department of Labor will communicate to states about how they can use their existing UI infrastructure to support these state-funded benefits using American Rescue Plan funds. This will enable states that choose to do so to more seamlessly provide support to unemployed workers, while complying with existing federal law and regulations.
Third, the Department of Labor is announcing an additional $47 million in new CAREER grants to support reemployment services for all Americans and provide a pathway back to employment. These grants are on top of the $43 million in grant funds for reemployment services announced earlier this year, more than $400 million in funding for proven workforce strategies, and support to workforce development agencies and other entities to ramp up services to connect workers with good jobs. The President is also encouraging states to use their American Rescue Plan state and local funds for this purpose.
Finally, 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. The President has already laid out his principles for such reform: he believes a 21st century UI system should prevent fraud, promote equitable access, ensure timeliness of benefits, provide adequate support to the unemployed, and automatically expand benefits in a recession.
On this final point, UWC is once again reviewing President Biden’s budget proposal and the proposal from Senator Ron Wyden (Chair of the Senate Finance Committee) with respect to new federally mandated permanent increases in unemployment compensation and UI tax increases that would be imposed long term to finances these expansions. The proposal from Senator Wyden would result in the largest Unemployment Insurance Tax increase in history. It was not previously included in the President’s budget proposal and did not appear to be included in the budget reconciliation outline proposed in the Senate. However, as congress considers final action on the infrastructure legislation and addresses the legislative language to be included with budget reconciliation these proposals could be raised for consideration.
