A silent crisis is taking its toll on the U.S. economy

September 5, 2021 – 8:28 p.m.

Spend less on food. Make use of savings for retirement. Stay completely out of the job market.

Last year, the United States massively expanded its unemployment benefits when COVID-19 exploded.

However, in the coming days these benefits will end up, forcing millions of unemployed Americans, some of whom have not worked throughout the pandemic, to make difficult decisions about how to deal with an economy now threatened by the delta variant. .

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“I have no idea how we’re going to survive on just my daughter’s income,” warned Deborah Lee, an unemployed phlebotomist in Arizona who is recovering from a covid outbreak that has affected her daughter and two of her three granddaughters. .

Government-funded aid programs, which increased weekly payments and helped the unemployed and the self-employed, were blamed for the United States not falling into a worse economic crisis last year.

But in recent months they have raised controversy as some states have prematurely canceled them and say they have encouraged people not to return to jobs that are already safe for vaccinated people, although there are studies that refute this claim. .

As of Sept. 6, aid will end nationwide, and while economists don’t expect it to significantly affect the U.S. recovery after the 2020 debacle, the change will undoubtedly increase pressure on the unemployed.

“I think it will be an underestimated fact in the economy,” said Andrew Stettner of The Century Foundation’s Progressive Analysis Center, which also predicted that 7.5 million people would depend on the programs when they end.

“It will be a kind of silent crisis.”

“I feel ruined”

The expansion of the safety net for the unemployed occurred in March 2020, when Congress rushed to mitigate the pandemic emergency with $ 2.2 trillion in spending through the Law Rescue Package CARES.

Although never intended to be permanent, the benefits were reauthorized twice, most recently last March with the Rescue Plan enacted by President Joe Biden and his Democratic allies in Congress.

Although many in the Republican Party initially supported the programs, for this year its legislators were debating and 26 states, most with Republican governors, decided to end them in whole or in part.

A study published last month by researchers at universities in the United States and Canada found barely modest improvements in hiring and wages in some of those states that ended aid prematurely, while consumption fell 20%.

Meanwhile the economy is far from healing: 5.3 million jobs lost by the pandemic have yet to recover and employers barely created 235,000 jobs in August, according to data that the government released this Friday.

Read also: Recovery of the labor market in the US .: not as good as you would like

In Delaware, Ohio, Karen Coldwell says she applies for about 10 vacancies each week and has not yet been hired. All the other offers he finds are for low-wage jobs, the kind of job he had when he was younger.

At 64, he is not yet ready to retire, but worries about having to resort to his retirement savings when long-term unemployment programs end.

“There’s just nothing out there. There are jobs, but the money isn’t over there,” Coldwell commented.

Others cannot return to the job market, even knowing that the benefits that constitute their only income will end. Brooke Ganieany of Dallas, Oregon, says she has no one to take care of her young son if he finds a job.

“I feel like I’m ruined,” the 21-year-old told AFP. “I feel like they’re doing this to force us to have a plan and get back to reality, and it’s not exactly the slogan they have to use.”

uneven damage

Some people will continue to receive benefits under regular unemployment programs, but the end of the additional $ 300 a week payments means their pockets are about to shrink.

“It’s going to affect a lot. I’m going to have to cut budgets on food,” warns Karen Williams, 58, a unemployed graphic designer from Pennsylvania.

Gregory Daco of Oxford Economics predicted that the profit cut will reduce household income by $ 4.2 billion per week during September.

“It won’t be the kind of blow that puts the U.S. economy in reverse,” he said in an interview, but predicted that “low-income families and minorities are the most likely to be negatively impacted.”

Fearful of new coronavirus variants, and with her daughter failing to receive much-needed payment in a family battling covid-19, Deborah Lee says she is waiting to see if the government will now grant her disability assistance for a hand injury. She is aware that her days as an employee are long gone, at least for now.

“I don’t even know what the answer is,” he concluded.