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Missouri has little clarity on plans for extra unemployment under Trump order

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Trump arrives in St. Louis

Pres. Donald Trump is greeted by Gov. Mike Parson at Lambert International on Thursday, July 26, 2018. Photo by J.B. Forbes,

JEFFERSON CITY — Missouri officials offered little clarity Monday on how, when — or if — the state would implement President Donald Trump’s executive order to pay extra unemployment benefits to millions of jobless Americans, including around 200,000 Missourians.

“I think it’s a little premature to say exactly how that’s going to take place until we talk to the federal delegation and really see, long term, what that plan is on that,” said Gov. Mike Parson.

His team spent the day assessing options, he said, adding that “we’re going to try to make sure that we implement it” and “get as much of it as we can.”

Trump’s order, announced Saturday, said governors could request “lost wages assistance” from the U.S. to use federal money to begin paying an extra $400 in unemployment insurance per person — the White House’s replacement for Congress’ $600 supplement that expired two weeks ago. But the order appeared to come with a caveat: States would have to cover a quarter of the supplement, or $100 per person per week.

For most of Monday, governors of red and blue states spent the day scrambling to figure out how it would work and if their cash-strapped coffers could find tens of millions of dollars a week to match the federal offer.

But, over the course of the day, the Trump administration clarified that states could apply for the funding without contributing a portion, effectively reducing the executive order’s impact to a $300 weekly supplement from the $400 initially touted.

Meanwhile, the White House and Congressional leaders all signaled Monday that they’d prefer a legislative package rather than the executive order, which would only provide about five weeks of unemployment supplement, and could face legal challenges.

The Trump Administration’s executive order followed weeks of fruitless negotiations in Washington. The Democrat-controlled House passed a bill in May to extend the $600-per-week federal supplement to state unemployment insurance. The Republican controlled Senate only began negotiating on a new package late last month, and both GOP Senate leaders and the White House sought to scale back the unemployment supplements.

That $600-a-week payment, part of the Coronavirus Aid, Relief and Economic Security Act that Congress approved in late March, expired at the end of July.

Paul Bergman, a self-employed sales and marketing consultant in the St. Louis area, applied for unemployment back in March. He and his wife should be able to make it through the year on their existing incomes, but they’ve felt the loss of the $600 supplement.

“Luckily, my wife found a new job so we aren’t in any danger of missing any payments on anything,” he said in a text message.

Still, he added, losing the extra payments make life “a lot more stressful and budgets even tighter.”

Some economists worry economic fallout is looming. Steven Fazzari, a Washington University economist, said the loss of $600 weekly payments to the roughly 25 million Americans on unemployment equates to a loss of some 4% of gross domestic product. Beyond the hit to individual households, that huge drop in demand is enough by itself to cause a recession. The broader economy will start to feel it quickly, he said.

“That’s a big negative demand shock for the economy,” said Fazzari, a scholar of the Great Recession. “On top of everything we’ve seen, taking another 2, 3, 4% out of the economy, that’s a big deal.”

It’s unclear whether Trump’s order can get money into cash-strapped peoples’ hands quickly.

The announcement, and efforts to explain it, left state officials confused and worried about how to come up with a match, which the order seemed to suggest could be paid with any coronavirus relief funding left over from what was sent to the states.

Missouri has about $950 million remaining from the $2.08 billion in relief aid it received, according to State Treasurer Scott Fitzpatrick’s portal of state spending.

As of the end of July, there were about 170,000 Missourians on the regular unemployment rolls, and another roughly 60,000 people on the Pandemic Unemployment Assistance program for self-employed workers that don’t qualify for regular unemployment.

At those levels, it would cost the state about $23 million a week to pay the matching $100 unemployment benefit that the Trump administration now says it does not require, but encourages.


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