The Best Time to Plant a Tree: The State of Unemployment Benefits in the US By: Gabriel PotterMBA, AIFA® 2020.07.27

The benefits provided to unemployed workers shielded the market and consumer-confidence levels from the worst of the damage, but there are some estimates that as many of half of the jobs lost in the pandemic may be permanently lost.  That’s about 10 million lost jobs, if that estimate holds true.

Last week, we tried to remind our readers that the $600 additional federal unemployment provisions were set to expire next week.  We asserted that there were hidden but fervent negotiations going on under the surface.  This week those hidden debates bubbled to the surface, but it might be a little too late. 

First, we’ve already reached the deadline for several states’ unemployment paperwork – there will (at a minimum) be a gap in coverage.  Second, there have been complaints that the unemployment benefits were too generous, disincentivizing workers from re-entering the labor force.   As a result, several policy making groups have been debating about the size of continued benefits.  These arguments continue to take up time which states don’t have.  Third, the proposed solutions may take even more time to implement.  For example, one proposal has suggested unemployment benefits replace income up to 70% of pre-pandemic personal income levels.  Implementing this sort of solution across 50 different states and will require some quick programming and development; it is estimated that this sort of solution would take 20 weeks – 5 months – to implement.

I’m reminded of the proverb: “The best time to plant a tree was 20 years ago; the second-best time is now.”  Really, these questions about benefits should have been decided weeks ago, but we’re truly running out of time to get a viable fix, or even an imperfect stop-gap measure, in place.


Gabriel Potter

Gabriel is a Senior Investment Research Associate at Westminster Consulting, where he is responsible for designing strategic asset allocations and conducts proprietary market research.

An avid writer, Gabriel manages the firm’s blog and has been published in the Journal of Compensation and Benefits,...

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