NEW YORK–Almost one-third of unemployment benefits estimated to be owed to the millions of Americans who lost their jobs as a result of the coronavirus slump haven’t been paid yet, as states struggle to cope with the unprecedented wave of layoffs, according to a new analysis.
It’s a reality credit unions have faced as more members seek forbearance on numerous different types of loans.
The Treasury disbursed $146 billion in unemployment benefits in the three months through May, according to data published Monday -- more than in the whole of 2009, when jobless rates peaked after the financial crisis, according to Bloomberg.
Figure Likely an Underestimate
“But even that historic figure falls short of a total bill that should have reached about $214 billion for the period, according to Bloomberg calculations based on weekly unemployment filings and the average size of those claims,” the report stated. “The estimated gap of some $67 billion shows how emergency efforts to boost payments, and deliver them via creaking state-level systems, are lagging the needs of a jobs crisis that’s seen more than 40 million people file for unemployment as the economy shut down.”
The analysis comes at the same time the U.S. Department of Treasury and the IRS have announced 159 million Economic Impact Payments (EIPs), worth more than $267 billion, have been distributed to Americans in two months. Payments have been sent to all eligible Americans for whom the IRS has the necessary information to make a payment. These totals do not include the more than $2.5 billion that have been delivered to U.S. territories for payment to territory residents.
Safety Net
There’s “a huge hole,” Jay Shambaugh, an economist at Brookings Institution who has been tracking the unemployment payments, told Bloomberg. “There’s a lot more money that should have gone out that has not gone out.”
Bloomberg added the bill is still mounting. Economists estimate that another 1.8 million people filed for unemployment last week.
Bloomberg said its calculation of what should have been paid is based on continuing claims for benefits, including those filed under a special program that widened the safety net to include contractors and gig workers. It assumes filings for missing weeks in May will be in line with the average in preceding weeks. Those claims were multiplied by the weekly unemployment benefit, using the $378 state average plus the $600 boost that’s due to expire at the end of July, Bloomberg said.
One State’s Example
Overall, Bloomberg said its calculation probably understates the total amount owed to unemployed Americans. In Texas, for example, where more than 2.6 million unique claims for jobless benefits have been filed since March, the backlog of cases still waiting to be verified at the end of last week stood at almost 650,000.