Monday, September 27News That Matters

Unemployment Claims Are Lowest Since Pandemic Began

The Fed changed its policy framework last year to focus on “shortfalls” from full employment, rather than “deviations.” In practice, that means it does not plan to raise interest rates just because the labor market heats up — for instance, if unemployment drops below historically normal levels — so long as inflation is under control.

“The more vibrant the labor market is, the more likely it is to be an inclusive, vibrant labor market,” Charles Evans, president of the Federal Reserve Bank of Chicago, said on a call with reporters Thursday. “We’re not going to prematurely cut off a vibrant labor market.”

Frequently Asked Questions About the New Stimulus Package

The stimulus payments would be $1,400 for most recipients. Those who are eligible would also receive an identical payment for each of their children. To qualify for the full $1,400, a single person would need an adjusted gross income of $75,000 or below. For heads of household, adjusted gross income would need to be $112,500 or below, and for married couples filing jointly that number would need to be $150,000 or below. To be eligible for a payment, a person must have a Social Security number. Read more.

Buying insurance through the government program known as COBRA would temporarily become a lot cheaper. COBRA, for the Consolidated Omnibus Budget Reconciliation Act, generally lets someone who loses a job buy coverage via the former employer. But it’s expensive: Under normal circumstances, a person may have to pay at least 102 percent of the cost of the premium. Under the relief bill, the government would pay the entire COBRA premium from April 1 through Sept. 30. A person who qualified for new, employer-based health insurance someplace else before Sept. 30 would lose eligibility for the no-cost coverage. And someone who left a job voluntarily would not be eligible, either. Read more

This credit, which helps working families offset the cost of care for children under 13 and other dependents, would be significantly expanded for a single year. More people would be eligible, and many recipients would get a bigger break. The bill would also make the credit fully refundable, which means you could collect the money as a refund even if your tax bill was zero. “That will be helpful to people at the lower end” of the income scale, said Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting. Read more.

There would be a big one for people who already have debt. You wouldn’t have to pay income taxes on forgiven debt if you qualify for loan forgiveness or cancellation — for example, if you’ve been in an income-driven repayment plan for the requisite number of years, if your school defrauded you or if Congress or the president wipes away $10,000 of debt for large numbers of people. This would be the case for debt forgiven between Jan. 1, 2021, and the end of 2025. Read more.

The bill would provide billions of dollars in rental and utility assistance to people who are struggling and in danger of being evicted from their homes. About $27 billion would go toward emergency rental assistance. The vast majority of it would replenish the so-called Coronavirus Relief Fund, created by the CARES Act and distributed through state, local and tribal governments, according to the National Low Income Housing Coalition. That’s on top of the $25 billion in assistance provided by the relief package passed in December. To receive financial assistance — which could be used for rent, utilities and other housing expenses — households would have to meet several conditions. Household income could not exceed 80 percent of the area median income, at least one household member must be at risk of homelessness or housing instability, and individuals would have to qualify for unemployment benefits or have experienced financial hardship (directly or indirectly) because of the pandemic. Assistance could be provided for up to 18 months, according to the National Low Income Housing Coalition. Lower-income families that have been unemployed for three months or more would be given priority for assistance. Read more.

There have been false starts before, namely a burst of growth that faded as the virus worsened in the fall, but last week’s drop in claims was still notable for its size. In February, the economy remained more than nine million jobs short of where it was before the pandemic.

Unemployment claims have been at historically high levels for the past year, partly because some workers have been laid off more than once. Still, the bottom line is that the data recently has been favorable, said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

“Weekly numbers have been choppy but we’ve been on a downward trend since mid-January,” he said. “As more business owners see a reopening will come, they are more willing to hang on to staff.”

Between the state and federal programs, the number of new jobless claims last week was just under 900,000 after being stuck for months above one million a week.

There were 242,000 new claims for Pandemic Unemployment Assistance, a federal program covering freelancers, part-timers and others who do not routinely qualify for state benefits, a decrease of 43,000.