March 19, 2020
Many, perhaps most, workers who have lost their jobs as a result of the COVID-19 pandemic will be eligible to receive regular state unemployment insurance (UI) benefits for up to 26 weeks. But many other job losers who have a strong attachment to the labor force and depend on their earnings—self-employed workers, contract workers, gig workers, and others—are ineligible for UI because they have not been on the payroll of an employer who has paid UI taxes on their earnings.
Disaster Unemployment Assistance would make these self-employed workers, contract workers, and gig workers eligible to receive UI benefits. It is almost certainly the most effective fiscal policy tool available to the federal government to quickly blunt the economic damage resulting from the COVID-19 pandemic.
DUA is normally paid to workers who lose their jobs, but do not qualify for regular UI benefits, following natural disasters such as hurricanes, floods, tornadoes, and geological disasters like earthquakes and volcanic eruptions. The program is initiated by a Presidential disaster declaration and administered by the state UI agencies, which in turn are overseen by the U.S. Department of Labor.
DUA requires no new congressional legislation—it is authorized by the Stafford Act of 1988—and the administrative structure needed to make it run already exists. Because DUA is funded by the Federal Emergency Management Agency, it side-steps the eligibility problem faced by self-employed workers under the regular state UI program.
The advantage of DUA over other modifications to UI being considered, such as extended benefits, is that it assists workers who would otherwise not receive benefits, and it does so quickly—typically within two to three weeks of job loss. As a result, it is targeted to individuals whose work and income have been interrupted and who will likely require income for basics such as rent and utilities, car payments, and groceries.
In short, DUA would target federal financial assistance to a large group of workers whose work and pay have ended as a result of the COVID-19 pandemic, but who are ineligible for UI benefits because of their self-employment status. The legislative authority exists, and the apparatus to run the program is ready to go. Only a Presidential disaster declaration is needed to start what could now be the most beneficial single fiscal policy action available to the federal government.
References
Vera Brusentsev and Wayne Vroman, Disasters in the United States: Frequency, Costs, and Compensation (Kalamazoo, Michigan: W.E. Upjohn Institute, 2017).
U.S. Department of Homeland Security, Federal Emergency Management Agency, “Disaster Unemployment Assistance Fact Sheet,” May 2018.
U.S. Department of Labor, Employment and Training Administration, Unemployment Insurance Disaster Unemployment Assistance Handbook (ET Handbook No. 356 (DUA), July 2006.
More Upjohn Institute COVID-19 responses
- "An Unemployment Insurance COVID-19 Crisis Response" by Stephen A. Wandner and Christopher J. O'Leary
- "Preserving Jobs Despite the Coronavirus: Encouraging 'Labor Hoarding'" by Timothy J. Bartik
- "Coronavirus and the Economy: Repurposing Production, Helping the Needy, Saving Businesses, and Encouraging Job Preservation" by Timothy J. Bartik and Brad Hershbein
- "Housing policy is crucial to stem the coronavirus fallout" by Lee Adams, Brian Asquith and Evan Mast.
- "Shared-Work Programs Can Ease the Coronavirus’s Economic Impact" by Katharine Abraham and Susan N. Houseman
- "What is the likely impact of proposed COVID-19 stimulus payments?" by Marta Lachowska
- Stimulus steps the US should take to reduce regional economic damages from the COVID-19 recession, by Timothy J. Bartik, Brad Hershbein, Mark Muro and Bryan A. Stuart (Brookings)
Experts
