OLIVIER DOULIERY | AFP | Getty Images
Millions of people are on the verge of losing their unemployment benefits this weekend, when pandemic-era federal policies will end after nearly 18 months.
Congress authorized a historic expansion of the country’s jobless safety net in March 2020 to manage the aftermath of the Covid-fueled economic recession.
Lawmakers doubled these temporary extensions, which increased the number of people eligible for unemployment benefits and increased the amount of weekly aid for beneficiaries.
In the absence of action in Congress, this aid will expire after Saturday or Sunday, according to state administrative rules. It seems unlikely that lawmakers will extend policies for the third time given the improvements in the economy and the labor market in recent months.
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If that happens, some 8.8 million Americans will completely lose their profits, according to an estimate by The Century Foundation, a progressive thinking group.
About 3 million or so will see their aid reduced by $ 300 a week, according to the group. The average person would get about $ 321 a week without the supplement, or about 38% of their pre-dismissal salary, according to Department of Labor data.
“We’re cutting profits when many, many individuals still trust them,” according to Till von Wachter, a professor of economics at the University of California at Los Angeles and director of the California Policy Lab.
“This is a kind of recurring problem in American recessions. We ask politicians to present benefit programs and set end and start dates,” he added. “They’re set in advance and have nothing to do with how the economy is.”
The White House supports the completion of the $ 300 weekly premium payments as scheduled. Officials point to an average of 832,000 new jobs added per month over the past three months, and an unemployment rate in the United States that has dropped to 5.4% as proof of a booming economy.
However, the Biden administration urged states with high unemployment rates to continue paying benefits to certain groups after the cut this weekend, using federal funds allocated to states by the American Rescue Plan. These groups include the long-term unemployed and workers as independent contractors who do not meet the requirements for traditional state aid.
It’s unclear if states will, though. According to a spokeswoman, the U.S. Department of Labor does not track these decisions because the use of the funds is not under its supervision.
Already 26 states moved to end most or all federal benefits in June or July, before their official Labor Day limit.
We are reducing the benefits when many, many individuals still trust them.
Until von Wachter
director of the California Policy Lab
Its governors, all Republicans except Louisiana, said the increased benefits prevented people from seeking work and halting the economic recovery by exacerbating labor shortages.
The more generous benefits have also led criminals to turn to the unemployment system more often.
“Between mass fraud and labor shortages, expanded unemployment insurance benefits have arguably been the federal government’s most flawed and damaging economic policy enacted in response to Covid-19,” explains Rachel Greszler, researcher at the Heritage Foundation. think tank, he wrote in July.
However, the available evidence suggests that benefits have not played a significant role in recruitment challenges.
According to a recent study, in states that reduced federal benefits in June, approximately seven out of eight unemployed workers receiving benefits had not found work in early August. This suggests that withdrawing benefits did not lead to a positive increase in employment and caused households to cut $ 2 billion in spending on the local economy, according to the study.
Decreased spending can have a negative impact on jobs, if consumers stay out of the dining room and other money-saving activities.
According to Betsey Stevenson, a professor of public policy and economics at the University of Michigan, lawmakers need to weigh these net effects on employment when making policy decisions. In relation to unemployment benefits, the following question is asked: does the loss of household income or the disincentive effect of improved benefits matter more?
“People need money more than us to get the incentives [at the moment]Stevenson said, citing available research.
Economists suggest that factors beyond unemployment benefits are likely to play a more important role in employers ’difficulty finding workers.
For example, Covid health risks remain present, exacerbated by the highly contagious delta variant, and daycare-related roadblocks have not been completely reduced.