Delena Sanders unemployed
Unemployed workers about to lose enhanced benefits
02:45 - Source: CNNBusiness
CNN  — 

Unemployed Americans would see a big cut in benefits but no incentive bonus to return to work, under a bill unveiled by Senate Republicans on Monday.

The change would most greatly affect low-income workers, who make up a disproportionate number of those who lost their jobs during the coronavirus pandemic.

The all-stick, no-carrot GOP proposal calls for slashing the weekly federal enhancement to unemployment benefits to $200 for the next two months, down from the $600 that the jobless had received since April.

That generous boost, part of the $2 trillion coronavirus relief bill passed in late March, technically expires Friday, though no payment will be made for this week.

Starting in October, the unemployed would receive a payment that when combined with their state benefit would replace 70% of their lost wages through the end of the year. The supplement could be no more than $500, but many workers – particularly low-wage ones – would receive a lot less than that.

“This is a massive, massive cut in the program – more than it even seems,” said Michele Evermore, a senior policy analyst at the National Employment Law Project.

State benefits vary widely but typically replace about 40% of wages.

States that need more time to set up such a system could apply for a waiver to continue paying a fixed dollar amount for up to another two months. Under that scenario, the jobless could receive payments tied to their wages for as little as one month before the supplement expires on December 31.

Just adding the extra $600 took states weeks to set up, and many agencies say that basing an enhancement on individual workers’ wages would be much more difficult to implement.

The Republican opening offer differs sharply from the House Democrats’ bill, which would extend the $600 payment into early next year.

Driving the GOP proposal is the concern that many workers were making more on unemployment benefits than they did in wages and would not want to go back to their jobs. Some two-thirds of recipients were receiving bigger checks, thanks to the $600 boost, according to University of Chicago researchers. Employers have said they are having trouble bringing workers back or hiring new ones.

About 20% of unemployed people would receive more in unemployment benefits than in wages with a $200 federal supplement, according to the researchers.

To provide an incentive to return to work, GOP lawmakers had considered providing a bonus to people who accepted job offers. However, that measure did not make the final cut.

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Also, under the Republican proposal, the federal supplement would count as income toward public assistance programs, such as food stamps. That means some jobless folks could lose their eligibility for this aid. The earlier CARES Act exempted the $600 federal payment from consideration.

GOP lawmakers also want to tighten the documentation requirements for those receiving benefits under the pandemic unemployment assistance program, which temporarily expanded the payments to gig workers, freelancers, independent contractors and certain workers affected by the coronavirus.

The proposal would require them to substantiate their prior work or self-employment within 21 days.

CNN’s Phil Mattingly contributed to this report.