Summary of Pandemic unemployment assistance (PUA) by Carolyn Saephan
Pandemic unemployment assistance (PUA) is a program that temporarily increases unemployment insurance to those people affected by Covid-19 since the beginning of the year. This program covers business owners, laid-off employees, freelancers, gig workers. The other eligibility criteria is a person who has no reported wages for the last year and a half. The insurance also covers an individual or household with someone who has contracted the disease or someone waiting to join a job but is not able due to the pandemic.
PUA was created by section 2102 of the CARES Act, which requires an eligible person to be able and available for work but cannot do so due to a situation related to COVID-19. The benefits are calculated from a person’s previous earnings. The formula for calculating this is given by the Disaster Unemployment Assistance program under the Stafford Act. The Federal Pandemic Unemployment Compensation program may give eligible people about $600 each week beginning July 1. States will give workers a retroactive benefit of up to 39 weeks.
The Unemployment Insurance has three programs under it:
Pandemic Unemployment Compensation (PUC)
Pandemic Emergency Unemployment Compensation (PEUC)
Pandemic Unemployment Assistance (PUA)
Under PUA, the benefits are issued in phases depending on how one has lost work. Government, businesses, and the bank of America are the main players in these programs.
PUA has impacted the economy in a number of ways particularly the reduction in the gross domestic product due to benefits paid to workers. Businesses and households have abandoned travel plans. The recovery period for the economy could take years and it is not clear what the economy will be like even if a vaccine is found. Businesses bear the cost of unemployment by paying unemployment tax. This financial responsibility on employers is bigger than the claims of beneficiaries.
During this period the unemployment rate has been on a record high standing at 14.7 percent which is the worst since the greatest depression. 22 million people have become unemployed since the beginning of May.
The relevance of PUA to money and banking is that it has ensured people without jobs are able to maintain a desirable level of consumption. Americans will have to cover this expenditure later on with taxes. The job market is crumbling and many businesses may not be able to recover due to bankruptcy and loss of business during this time. The result will be an economy in a deep recession and debt.
In conclusion, the role of this program is to assist individuals during this period of huge uncertainty. There is a likelihood that unemployed people will be discouraged to get jobs especially if they consider this aid generous. Although PUA is scheduled until December, there might be a need to extend it beyond December 31st.