A bill introduced in the U.S. Senate last week would provide up to $250 in weekly unemployment benefits to gig workers.
Sens. Ron Wyden, D-Oregon, and Michael Bennet, D-Colorado, introduced the Unemployment Insurance Modernization Act. The 106-page bill seeks to overhaul current unemployment insurance benefits, allowing them to fluctuate in amount and length during times of high employment, among other changes. It would also codify jobless benefits to workers who quit for certain reasons, such as the loss of child care.
“Our unemployment insurance system is broken, and it’s been broken for decades. As we’ve seen the last year, it’s much harder for the unemployment system to work in a crisis when it’s been neglected and sabotaged,” Wyden said in a statement. “We can’t fail again to fix it in the wake of the second major economic crisis in 10 years.”
Congress moved quickly to support unemployed workers during the COVID-19 pandemic, even allowing so-called gig workers and the self-employed to qualify for benefits for the first time. The Wyden-Bennet bill would seek to make some of those changes permanent.
“A 21st century economy demands a 21st century safety net that supports workers who lose their jobs through no fault of their own,” Wyden said.
State-level unemployment benefits vary greatly. Including the extra $300-per-week benefit included in the American Rescue Plan passed in March 2021, some states saw their weekly benefit rise to $500 while others surpassed $900.
According to Ziprecruiter data, Louisiana paid an average of $247 a week without the added $300. Mississippi was even less, at $235. Arizona was at $240 and Alabama at $275.
On the other end of the spectrum are Massachusetts at $823 and Washington at $844.
“Our proposal would help ensure benefits cover the basics, minimize the glaring disparities between state programs and create a permanent benefit for self-employed workers. Importantly, it would also prevent another race to the bottom where state after state cuts its program to the bone. If we don’t fix unemployment insurance now, the system will be even more broken when the inevitable next recession hits,” Wyden said.
The bill would require states to provide 26 weeks of benefits at 75% of a worker’s salary up to a state’s maximum weekly benefit, which would be determined based on two-thirds of a state’s average weekly wage.
The inclusion of gig workers and the self-employed is an even bigger win, if the bill passes.
“The proposal would also establish a $250 per week Jobseeker Allowance that would be available to any jobless workers not covered by the traditional unemployment insurance system, such as self-employed workers and new entrants to the labor force,” reads a explanation from the Senate Committee on Finance, of which Wyden is chair. “The proposal also creates a $25 weekly federal allowance per dependent and provides for federal funding to increase unemployed workers’ wage replacement rates to 100 percent during major disasters or public health emergencies.”
Passage of the bill is questionable at best. The American Rescue Plan received no Republican support in the Senate but was passed through the Reconciliation process, requiring only a simple majority. The Unemployment Insurance Modernization Act would require 60 votes to pass the Senate, making passage an uphill climb.
According to an online survey of 2,788 U.S. adults by payments firm daVinci Payments, the gig economy actually grew in 2020, rising 33% to $1.6 trillion. Thirty-seven percent of workers are employed only in gig work, and the number of gig workers who earned less than $15,000 in 2020 was 69.8 million, a 35% increase from 2019. That is 74% of all gig workers. The average gig worker income was $17,445 in 2020, up from $16,926 in 2019, daVinci said.