Outdated state unemployment insurance systems across the U.S. that struggled to handle the first round of coronavirus aid for out-of-work Americans could take months to adopt a Republican proposal that would cap benefits at a certain percentage of workers' former salaries.
A $1 trillion stimulus package unveiled by Senate Republicans on Monday proposed cutting the extra weekly unemployment benefits from $600 to $200 until states can adopt a more complicated system that would limit the aid at 70 percent of the income workers received before they lost their jobs.
But in a memo to lawmakers on Capitol Hill, a copy of which was first obtained by NPR, the National Association of State Workforce Agencies said it would take most states eight to 20 weeks to shift to a system of doling out weekly benefits based on workers' wages before losing their jobs.
"For any new legislation, states ask that an effective date be set in the future with sufficient time for programming," the memo said.
The National Association of State Workforce Agencies did not respond to a request for comment.
More than 30 million Americans, or roughly one in five workers, are collecting the financial support, according to Labor Department data.
Without the sweetened aid, the typical unemployment check, which varies by state, will return to below $400 per week. It will drain roughly $15 billion per week from the economy, according to one estimate from the Century Foundation, raising fears of a "fiscal cliff" that will hurt both individual households and the economy's gradual recovery.
The potential delays are so severe that in May, the Department of Labor said in a memo to the House Ways and Means Committee that it "strongly opposites a change in the FPUC program that would base the amount paid on the amount an individual claimant was paid."
The agency said it would face "extraordinary challenges in implementing a payment in a flat amount on top of benefit payments in multiple programs," adding that it would "find it exceedingly difficult, if not impossible, to implement a unique payment amount in addition to the various benefit payments to which FPUC applies, from both a technology standpoint, but also with getting adequate information on which to determine the amount payable.”
The Department of Labor did not respond to a request for comment.
State agencies are hobbled by notoriously outdated technology and understaffed offices; many rely on COBOL, an Eisenhower-era computer system. They also had to reckon with an unprecedented number of applications for jobless benefits. In the span of 54 weeks, some 52 million Americans have filed for aid.
Under the Republicans' proposal, the extra $200 per week in unemployment aid would last through September, giving states a little more than two months to adapt to the new system. Beginning in October, that payment would be replaced with an amount that was calculated based on the recipient's former salary, with no check exceeding $500, according to a memo from the Senate Finance Committee.
If states are unable to get their unemployment programs up-to-speed by the end of September, they can apply for a waiver from the Department of Labor to continue paying a fixed dollar amount for up to two more months, the memo said.
In October, that extra payment would count as income when determining eligibility for federal low-income programs.