How will the expansion of unemployment benefits in response to the COVID-19 pandemic be recorded in the NIPAs?

The Coronavirus Aid, Relief and Economic Security Act (CARES), which was signed into law on March 27, 2020, provides $268 billion for expanded unemployment insurance benefits provided through three programs:

  • The Federal Pandemic Unemployment Compensation (PUC) payments are $600 weekly supplemental benefits for people receiving unemployment benefits for weeks of unemployment between April 5, 2020, and July 31, 2020.
  • The Pandemic Unemployment Assistance (PUA) program temporarily provides unemployment benefits to people who are not usually eligible including the self-employed, independent contractors, and those with limited work history if they are unable to work for reasons related to COVID-19. This program pays for up to 39 weeks of unemployment benefits between January 27, 2020 and December 31, 2020.
  • The Pandemic Emergency Unemployment Compensation (PEUC) program provides an additional 13 weeks of unemployment benefits to people who have exhausted all available regular and extended unemployment benefits through December 31, 2020.  

In the NIPAs, unemployment insurance benefits are classified as federal social benefits to persons regardless of whether they are financed by the unemployment trust fund or by separate federal appropriations. Social benefits are published as a component of federal government expenditures on line 28 of NIPA Table 3.2 and as a component of personal income on line 17 of NIPA Table 2.1 and NIPA Table 2.6. Quarterly values of unemployment benefits are also published on NIPA Underlying Detail Table 3.12U. Regular and extended unemployment benefits, including benefits paid to people eligible through the PUA program and the value of supplemental PUC payments, are included on line 8 and PEUC benefits on line 11. BEA's estimates of unemployment benefits are based on weekly data on the number of people claiming regular state benefits, PUA benefits, and PEUC benefits from the Department of Labor's Employment and Training Administration.

The Families First Coronavirus Response Act (FFRCA), which was signed into law on March 18, 2020, provides $4.7 billion in additional funding to state governments to administer unemployment programs and fund benefit payments:

  • Emergency administrative grants to states fund activities related to processing and paying unemployment insurance benefits. To receive these grants, states must meet specified criteria, including waiving one-week waiting periods and work search requirements.
  • The federal government funds 100 percent of the cost of extended unem­ployment benefits through December 2020 for states that receive emergency administrative grants.  Usually, the federal government funds 50 percent of these benefit costs.

A presidential memoranda that was issued on August 8, 2020 authorizes $44 billion in spending from the Federal Emergency Management Agency’s Disaster Relief Fund (DRF) for Lost Wages Assistance (LWA) payments. Similar to the PUC benefits authorized by the CARES Act, LWA benefits are $300 weekly supplemental payments for people who are already receiving at least $100 in weekly unemployment benefits. LWA benefits can be claimed for weeks of unemployment from July 26, 2020 until the funds are exhausted.

The distribution of LWA benefits is administered by state unemployment offices and states can use up to 5% of DRF funds to cover administrative costs, subject to cost sharing requirements. In the NIPAs, benefits paid from the Disaster Relief Fund are included in other social benefits on line 23 of NIPA Table 2.1 and NIPA Table 2.6 and on line 26 of NIPA Underlying Detail Table 3.12U.

Although all unemployment benefits are classified as federal social benefits in the NIPAs, unemployment insurance programs are administered by state governments and their administrative expenses are included in estimates of state and local government output and consumption expenditures. Federal grants to the states to fund the administration of these programs are recorded as federal government current expenditures on line 31 of NIPA Table 3.2 and as state and local government current receipts on line 18 of NIPA Table 3.3.