On 27 March Donald Trump signed the Cares Act into law, Congress’s main sweeping response to the economic depression which was induced by coronavirus. There are many problems with it, but one truly exemplary part of the legislation was the federal addition of $600 a week to unemployment benefits.
The United States historically has very ungenerous unemployment benefits. With tens of millions of people becoming unemployed, many households would be facing foreclosure, eviction and worse on those skimpy unemployment benefits. Instead, for those actually able to receive their benefits, the additional $600 a week has made unemployment compensation a livable income and helped many people survive these difficult times.
This policy is all the more amazing because it was accidental. The original proposal for increasing unemployment insurance was to increase the “income replacement rate” of unemployment compensation to 100%. In other words, Congress initially intended to simply make sure that everyone was paid unemployment compensation equal to their previous average wage income. Congress changed the proposal to adding $600 a week when it became clear that increasing the replacement rate was not something that state unemployment insurance systems could implement with their ageing, understaffed and underfunded information technology systems. Six hundred dollars a week is approximately the amount of money it would take to bring the “average worker” up to 100% replacement of their income.