Big boost in unemployment checks, but no pay hike for workers

A $600-per-week boost in unemployment benefits, part of the federal government’s $2 trillion stimulus response to the coronavirus outbreak, has sparked some backlash.

As the bill neared final approval, Sen. Lindsey Graham, R.-S.C.,  was widely quoted as saying the bonus would incentivize people not to work and, in effect, force employers to compete with a $24 minimum wage.

It didn’t take long for this claim to appear on Facebook:

"Unemployment now pays $24/hour even if your wages were lower. Why don’t ‘essential’ people forced to still work get $24 too?"

The post was flagged as part of Facebook’s efforts to combat false news and misinformation on its News Feed. (Read more about our partnership with Facebook.)

The stimulus does not specify unemployment payments at a rate equivalent to $24 per hour — though, as a result of the $600 temporary boost, some unemployed people will receive weekly unemployment payments at that rate. 

Furthermore, the stimulus does not boost pay for people still on the job, including essential workers who earn less than $24 per hour.

President Donald Trump signed the stimulus bill — known as the Coronavirus Aid, Relief and Economic Security Act, or the CARES Act — into law on March 27, 2020. 

The law includes what is known as the federal pandemic unemployment compensation provision. The temporary provision adds a bonus of $600 per week, for up to four months, to what you would already receive in state-based unemployment payments. 

Self-employed people, independent contractors and gig economy workers, who were not previously eligible for standard unemployment benefits, are now eligible through Dec. 31, 2020.

The same law offers the same $600 per week of federal add-on assistance for out-of-work self-employed, contractor, gig and part-time workers as it does for full-time workers. The bonuses began April 5, 2020 and are available through July 31, 2020.

Here’s how Graham came up with $24 per hour, or at least close to it, according to his Senate staff:

In South Carolina, the maximum weekly unemployment benefit is $326. If you add the $600 federal bonus, that’s $926 per week. For a 40-hour work week, that comes to $23.15 per hour. (In some interviews about the $600 bonus, Graham said that would amount to $23 per hour.)

So that’s pretty close to $24 per hour. But again, it’s only for the unemployed in South Carolina receiving the maximum weekly unemployment payment.

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Regular unemployment benefits vary by state. South Carolina’s maximum is on the lower end, according to the latest Congressional Research Service report, from July 2019. The highest maximum, $1,192 per week, is in Massachusetts, which is among 11 states that add benefits for unemployed people with dependents.

Nationally, regular unemployment covers half your wages, up to a cap of about $450 in regular earnings per week, Heidi Shierholz, former chief economist at the U.S. Department of Labor, told PolitiFact. So, a person who normally earns $450 would receive $225 in regular unemployment benefits, plus the $600 bonus, or $825 per week  — more than their regular pay. That’s about $21 per hour.

Viewed another way, as of January 2020, the average weekly unemployment benefit was $385 per week, Gary Burtless, a senior fellow in economic studies at the Brookings Institution, told PolitiFact. Add $600 to that and that comes to more than $24 per hour.

But that’s based on an average, not a national standard.

Burtless noted that unemployment payments vary not only by state, but also within a state from one recipient to another, because the benefit depends on each worker’s earnings record.

Asked by Fox News talk show host Sean Hannity why the higher unemployment payments aren’t capped at what a recipient made on the job, Treasury Secretary Steve Mnuchin said state unemployment offices have 35-year-old computer systems, and a more complicated unemployment aid formula would have taken months to set up.

"The simplest way was, and the fairest way was, $600 per person," Mnuchin said. "In certain states, that might be a little bit too much money; in other states, it’s less money. It’s not a perfect system, but the president’s objective was to make sure you get money in people’s hands."

The main complaint of the Facebook claim, though, seemed to be that people who are still employed but earning less than $24 per hour aren’t getting bonuses to boost them to that level.

Most adults will receive a one-time stimulus payment of $1,200, which is expected to occur in April 2020. But that goes to the unemployed as well as the employed.

In short, there is no additional pay from this stimulus package for people who remain employed. That includes people in essential jobs such as grocery store clerks, delivery workers, food and medical supply-chain workers, and lower-paid hospital staff.

An earlier federal stimulus law — the Families First Coronavirus Response Act — gave all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members. That will help many workers who previously didn’t get paid sick leave from their employer.

The post says, "Unemployment now pays $24/hour, even if your wages were lower. Why don’t ‘essential’ people forced to still work get $24, too?"

This is an oversimplification. Other than a one-time stimulus payment of $1,200 that will go to most employed and unemployed adults, the latest  federal stimulus law responding to the coronavirus outbreak does not contain any additional provision to boost the pay of workers still employed, including those in essential jobs earning less than $24 per hour.

In addition, the law gives a $600-per-week boost in unemployment payments, meaning that some recipients will receive payments equivalent to a $24 hourly rate.

However, the law does not specify that weekly unemployment payments be the equivalent of $24 per hour. Unemployed Americans who live in states with less generous unemployment benefits will receive less. 

The statement is partially accurate but needs additional context, so our rating is Half True.