Federal Pandemic Unemployment Compensation and Wage Replacement Rates

When coronavirus swept through the country in early March, the United States saw a public health crisis like no other in living memory. Shelter-in-place orders that were implemented to keep communities safe from coronavirus had another impact, a halt in most economic activity. Consumer spending dropped 6.9 percent in March year-over-year, falling to a 13.6 percent year-over-year decline in April. Personal income was down 2.2 percent in March, but, due to government programs such as increased unemployment insurance and the stimulus checks, up 10.5 percent in April, despite a record number of job losses. The CARES Act (signed into law on March 27, 2020) provided immediate relief to consumers and businesses to curb the economic impact of coronavirus shelter-in-place orders. The CARES Act was unique, providing quick financial relief and full-wage replacement for a significant portion of the dislocated workforce in the short term and stimulus checks to most Americans. As the July 31 expiration of many CARES Act policies approaches, it is imperative to know why the expanded unemployment provision policy was chosen and how its termination will affect workers. Full-wage replacement from Federal Pandemic Unemployment Compensation (FPUC) provided immediate relief for families who were not able to find new jobs due to the public health crisis. FPUC is the portion of the CARES Act that provides an additional $600 weekly benefit to workers claiming unemployment through July 31. When Congress drafted FPUC, it intentionally decided an amount of extra unemployment compensation that would bring most workers to full-wage replacement.