COVID-19 has been a nightmare for everybody, and drivers have certainly not been spared. When the lockdowns first occurred, and people stopped pinging for rides to work, restaurants, bars, airports and other fun and important places, being a driver was like being ejected from a burning building by the sheer force of the destruction underway.
Who knew where we were going to land?
With our source of income in freefall, it was a huge comfort to receive the benefits spelled out by the CARES Act.
For the first time, drivers and other independent contractors could receive unemployment compensation, which seemed like a miracle in itself. On top of that, the federal government would pitch in an extra $600 per week. It felt like we were propelled out of that flaming building, only to be cushioned by a soft, cozy safety net.
In late March, when the CARES Act became law, we were told that this comfy place would be ours through July 31. We were okay with that because at the time, it seemed pretty far away.
As we all know, however, that date has come and gone—and so has the $600 unemployment subsidy. We were told that an August 8 executive order signed by the president would provide some relief, but not everyone is seeing that yet. There seem to be more questions than answers about how much the subsidy will be and who’s responsible for paying it.
Now that we’ve found out about some holes in the safety net, what can we expect to see in terms of unemployment enhancement in the coming months?
In this blog post, we’ll outline the various moving parts of the replacement for the unemployment subsidy, how it will affect drivers, and what drivers can do to stay solvent. Here’s what will be covered:
- What happened to the CARES Act?
- What the August 8 executive order does
- How the executive order is working so far
- What this means to drivers who depend on PUA and the federal enhancement
- What drivers can do to stay financially alive
What happened to the CARES Act?
As we wrote in a previous post principle of the unemployment subsidy executive order, the CARES Act provisions for the extra $600 per week expired on July 31. The CARES Act was very clear about the federal enhancement and its time limit, and as laws often do, this one reached its expiration date.
It was obvious by July 31 that the assistance offered to people affected COVID-19 was still sorely needed by many. There were efforts to extend the benefits, and you probably heard about them.
A string of meetings brought representatives of both houses of Congress and the White House into the same room at safe social distances, but there was no real meeting of the minds.
Instead, a highly politicized legislative brawl broke out. Rather than offering relief to the American people, Congress left for its summer recess without any kind of provision for continuing all or some of what the CARES Act had offered.
In early August, after it was clear that no legislative solution could be negotiated, the president signed the executive order.
The measure he signed may or may not have been crafted to bring the parties back to the negotiating table. At its best, it was an attempt to put a bandage on the wound that afflicts people who have lost the extra unemployment. To this day, it’s still not clear if it will be enough to help that wound heal.
What the executive order does
The executive order was sold as a compromise between the $600 the Democrats wanted to continue giving unemployed workers on a weekly basis, and the $200 that the Republicans thought made sense.
The president and those who spoke to the public about the executive order stated it would provide $400 per week to qualified unemployed workers.
Of that amount, $300 would be paid by the federal government, and the remaining $100 (25 percent ) would be covered by the individual states.
How did this expense wind up in the lap of the states? And with many of them already struggling financially because of COVID-19, why must the individual states contribute anything at all?
Although in this era of the words “trillions of dollars” being tossed around with increasing regularity, the fact is that no president or other single government executive can pull money out of thin air. There are also strict limitations on how much spending authority a president has.
The U.S. Congress has the sole authority to spend taxpayers’ money, which is often referred to as the “power of the purse.” That means any financial measure the president takes with an executive order must be handled with monies that have been previously allocated.
Now that you know all this, here’s what the executive order actually does:
- Directs $44 billion from the Department of Homeland Security’s Disaster Recovery Fund to cover 75 percent of the cost of the federal unemployment enhancement, or lost wages assistance—which is the $300 per week;
- Directs individual states to make up the other 25 percent of the $400 weekly amount, using funds already allocated to them by the federal government from the Coronavirus Relief Fund (CRF), or other state funding;
- Allows states to use these funds, including those already being used for unemployment insurance, to make their 25 percent contribution to the $400 weekly supplement;
- Extends continued supplemental weekly unemployment benefits to those whose jobs or wages have been adversely affected by COVID-19, with an ending date no later than December 27, 2020;
- Asks states to identify funds that can be used if the money for enhanced unemployment should run out before December 27, 2020.
How the executive order is working so far
In most cases, the states would be using money they have already received from the federal government to cover their 25 percent of the unemployment subsidy costs. But whether this is realistic, or if the states can afford it, are matters of uncertainty right now.
Some states believe this is too much to ask, because their budgets are already strained by COVID-19 and bleak economic conditions.
If you’re confused by now, we can’t blame you, especially if you thought this was all going to happen seamlessly and quickly. It hasn’t and it won’t, because on top of finding the funds, each state must ASK for the extra funds.
The acquisition process involves hoops each state must jump through with the Federal Emergency Management Administration (FEMA), whereby the state explains exactly how the funds will be spent. This document from FEMA provides the details of what the agency requires of the states before money can be allocated under the executive order.
Each state must also agree to administer the allocation—which not only complicates the process, it adds to the states’ administrative costs. Just as we saw when the CARES Act was first implemented, technical problems happen. The requirements of the CARES Act strained antiquated computer systems in many states, and produced delays in payments that were supposed to be in unemployed workers’ hands long before they actually were.
What this means to drivers who depend on PUA and the federal supplement
As of August 25, 2020, 32 states have been approved by FEMA to administer the program, and just two (Arizona and Texas) have begun to send out payments. Although the executive order offers some relief to those of us who still need that federal subsidy, it isn’t quite the saving grace it was hailed to be.
One of the reasons Congress couldn’t agree on meaningful legislation to extend the CARES Act was the large amount ($600) of the weekly federal enhancement. There had been complaints from business owners, echoed by some Republicans in Congress, that employees were collecting more money from unemployment than they would have if they returned to work. Which, they claimed, was an incentive to not work.
Perhaps that was true, in some cases. But … what if you can’t return to work?
Since the pandemic began, we’ve seen many drivers diversify their earning activities, adding delivery to their duties, and hustling at other gigs to make something out of even the worst of times.
Sure, in many cases it’s possible to do all this. But when drivers have health factors that increase their risk of contracting COVID-19, or they live with people who are at great risk, it is not safe for them to go back to work and expose themselves to the virus.
What drivers can do to stay financially alive
This map from a Bloomberg article shows the states that have been approved by FEMA (two more have been approved since), and those which have not yet completed the approval process.
If you’re one of the drivers who is unable to go back to work, there isn’t a lot you can do to hasten the administration of the program dictated by executive order. You have no choice but to wait. BUT, if you live in a state that has yet to apply, you can put some pressure on your state officials to get the ball rolling.
We can all put pressure on our federal representatives to come up with a more permanent solution to this crisis. There is some possibility Congress and the White House will work out a better plan that will do a more satisfactory job of supporting drivers who are unable to work in the COVID-19 environment.
They will do this more quickly if they hear their constituents express their wishes in a
very loud chorus of voices. Don’t hesitate to use yours—and here’s a link to a government information website that can help you do just that. It allows you to search for your federal, state, and local elected officials, and to contact them.
If you can’t drive right now, and you’re not receiving adequate support through unemployment compensation, maybe you can make money with a side hustle you work from home. This blog post from April 2020 provides you with some possibilities.
If you are able to drive now, you know how important it can be to keep more money coming in. That’s why you need to drive for more than one platform.
Yes, rideshare is slow sometimes, so venture into grocery shopping and delivery. Also, you can vary your schedule to make the most out of rideshare. People may not be going to restaurants and bars right now, but they are doing grocery shopping and going to various appointments during the daytime hours. So they need you.
Stick with Gridwise, on and off the road
Gridwise is the ultimate assistant for rideshare and delivery drivers because we put you first. Whether you’re working now or not, the information visit our blog gives you up-to-the-moment insight into what’s happening in the industry, and how you can make the most out of your driving gig.
When you’re driving for more than one platform, Gridwise helps you juggle your gigs with ease. The app tracks your earnings and mileage for all of them, and presents them in easy-to-read formats. The app is free to download, and it also gives you access to driver deals and discounts, as well as quick access to the Gridwise YouTube channel. And … if you join us on Facebook, you can enter into Gridwise gas giveaway contests.
As you can see, Gridwise gives you a whole bunch of ways to win at the gig working game. We’ve got this, because we’ve got one another.
