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Senate Democrats unveil plan to overhaul unemployment insurance system

Jessica Smith
·Chief Political Correspondent
·3 min read
Sen. Ron Wyden (D-OR) speaks during a news conference after the first Democratic luncheon meeting since COVID-19 restrictions went into effect on Capitol Hill in Washington, U.S. April 13, 2021. REUTERS/Erin Scott
Sen. Ron Wyden (D-OR) speaks during a news conference after the first Democratic luncheon meeting since COVID-19 restrictions went into effect on Capitol Hill in Washington, U.S. April 13, 2021. REUTERS/Erin Scott

Sen. Ron Wyden (D., Oreg.) and Sen. Michael Bennet (D., Colo.) unveiled a plan on Wednesday to modernize and expand unemployment insurance in the U.S. The proposal would require states offer at least 26 weeks of benefits, replacing 75% of the workers' average weekly earnings. The state’s maximum benefit would be two-thirds of the state’s average weekly wage. More Americans would be eligible for jobless benefits and they would be able to apply for the benefits sooner.

As record numbers of Americans lost their jobs throughout the pandemic over the past year, many people struggled to access their benefits. Some people waited for weeks or months before they were able to receive their aid. 

“Our unemployment insurance system is broken, and it’s been broken for decades. As we’ve seen the last year, it’s much harder for the unemployment system to work in a crisis when it’s been neglected and sabotaged. We can’t fail again to fix it in the wake of the second major economic crisis in 10 years,” said Wyden in a statement.

A roadside banner beckons potential employees outside a Home Depot store in Hattiesburg, Miss., March 27, 2021. The number of Americans applying for unemployment benefits rose by 61,000 last week to 719,000, signaling that many employers are still cutting jobs even as more businesses reopen, vaccines are increasingly administered and federal aid spreads through the economy.   (AP Photo/Rogelio V. Solis)
A roadside banner beckons potential employees outside a Home Depot store in Hattiesburg, Miss., March 27, 2021. (AP Photo/Rogelio V. Solis)

The Wyden-Bennet proposal would require states to offer at least 26 weeks of benefits, replacing 75% of the workers' average weekly earnings. The state’s maximum benefit would be two-thirds of the state’s average weekly wage. More Americans would be eligible for jobless benefits and they would be able to apply for the benefits sooner.

The plan would also offer help to part-time and self-employed workers, who typically struggle to receive aid. A new program would establish a “Jobseeker Allowance” of up to $250 per week for people who are new to the labor force, self-employed and others who generally don’t qualify for standard benefits. Lawmakers established a temporary program during the pandemic to help gig workers and other workers who don’t usually qualify for aid.

“Unemployment programs are critical to helping workers stay afloat during difficult times — but too many workers still struggle to access their benefits in our patchwork of outdated state systems,” said Bennet. “Too many receive no protection at all when they lose a job — including many low-wage workers, workers of color, returning caregivers, and self-employed workers.”

The new plan would allow workers to receive jobless benefits for longer periods of time when unemployment rises. Wyden has long argued for automatic stabilizers that tie jobless benefits to economic conditions, like the unemployment rate, in order to avoid future political debates about how much aid should be given and how long it should last in times of crisis.

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“Our proposal would help ensure benefits cover the basics, minimize the glaring disparities between state programs and create a permanent benefit for self-employed workers,” said Wyden. “If we don’t fix unemployment insurance now, the system will be even more broken when the inevitable next recession hits.”

Lawmakers on both sides of the aisle have acknowledged outdated unemployment insurance systems that varied from state-to-state made it difficult to agree on proposals to ensure unemployed workers received enough money to get them through the economic and public health crisis.

Wyden and Bennet are also pushing to update unemployment insurance technology and reform the way the program is financed. While there has been bipartisan support for updating state computer systems, Republicans have generally opposed expanding jobless benefits, arguing it will discourage people from finding work.

Jessica Smith is chief political correspondent for Yahoo Finance, based in Washington, D.C. Follow her on Twitter at @JessicaASmith8.

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