Many people collecting unemployment have been hoping for a continuation of the federal payments, so for them, the executive order President Donald Trump signed sounds like good news. However, a local economist says they may be setting themselves up for disappointment.
On Saturday afternoon, President Trump signed executive orders deferring payroll taxes for those earning less than $100,000 a year. He also extended unemployment benefits but at a lower weekly amount of $400 a week. He also put a hold on student loan payments and extended a moratorium on evictions, after negotiations on a new coronavirus rescue package collapsed.
NBC 7 spoke with a young mother who is still waiting for her unemployment to kick in after the salon she worked at was forced to close its doors a second time. She said she was thrilled to find out about the President's executive order.
“Awesome. I’m glad to know that’s being extended. Obviously, that wouldn’t be a long term solution but definitely I’m grateful for this short term solution and the $400,” said Denise Solis.
Solis is staying at home with her two children and is cherishing the time she is spending with them but she still wishes she was bringing home a paycheck. Her husband is working overseas so there's some money coming in, but Solis says the executive order will add an additional $400 to her unemployment payment.
But is the president's executive order really a solution?
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"There are some questions about whether he has the legal authority to do it. There are questions about whether there's enough money that he has access to that will allow him to do this," said Alan Gin, a University of San Diego Economics Professor.
Gin says the money has to come from somewhere.
"There was talk about using money left over from the Cares Act but it's unlikely that there's enough there," Gin said.
Gin says families will likely wait a long time to get any additional unemployment money anytime soon.
"A new mechanism really has to be set up so it's actually gonna be delayed. It's gonna take longer than it would be if we had just extended the unemployment insurance program," he said.
Solis says with or without the extra money, her family will survive because her husband still has a paycheck.
"But I can't imagine for somebody who doesn't have you know, that opportunity," Solis said.
Gin also warns that the executive order to defer payroll taxes could have a devastating impact on Medicare and Social Security, which are funded by that tax.
