A woman waits on her head outside a temporary unemployment office in Frankfort, Kentucky, in June.
Bryan Woolston | Reuters
Pandemic unemployment benefits
The federal government expanded the safety net for the unemployed to a historic point last year, when the United States was in the midst of the fastest economic downturn in history. The CARES Act, passed in March 2020, increased weekly unemployment benefits by $ 600 a week (and later, $ 300 a week), offered help to workers who were not normally eligible for traditional unemployment benefits. the state, such as the self-employed, contract workers and part-time workers, and extended the time that people could receive aid.
Congress twice expanded the programs, last December and again this March, but chose not to do so for the third time.
This means that approximately 9 million people are about to lose these benefits on Labor Day, according to an estimate by The Century Foundation. About 3 million more or less will see their weekly profits reduced.
Families are afraid of what comes next.
“It’s going to leave some people in a bad situation,” said Sylvia Allegretto, economist and co-chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley, about the unemployment cliff of this head of week.
“The economy, for many reasons, has not fully recovered and it will not be for quite some time given this unfortunate but massive rise in Covid that we are seeing across the country,” he added.
The delta variant has added pressure to an already uneven economic recovery. The United States added 235,000 jobs in August, a sharp slowdown from about 1 million in June and July.
Discourage work?
Of course, some economists believe the programs should end now, arguing that enhanced federal benefits offer an incentive to stay home instead of looking for work. White House officials also recently indicated that federal benefits should cease as planned in most states.
There was a record 10 million jobs in June, surpassing the number of official unemployed. This dynamic has led some economists to wonder why the unemployed are in no hurry to fill the available jobs.
“It’s hard to justify having a program that encourages people not to work while employers struggle to keep their business [going]said Rachel Greszler, a researcher in economics, budget and rights at the Heritage Foundation, a right-wing think tank.
About half of U.S. states, led primarily by Republican governors, withdrew from most or all federal programs in June or July to encourage people to return to the labor market.
“I think it is [a] a bad trial, “said Aaron Davison, a 28-year-old unemployed Orlando resident.” I was grateful for my work. “
Florida ended a $ 300-a-week federal supplement to benefits in June; the rest of the programs expire this weekend.
Davison, who had been an assistant turnstile at Universal Studios Florida theme park, has used unemployment benefits to help support his parents, with whom he lives and who are unable to work due to medical issues. Although he has been actively applying for work for several weeks, he has not yet obtained anything.
With no job benefits or unemployment, expect to rely on the money raised from a GoFundMe page to help fulfill your accounts.
“[An] the extension could have saved families from financial ruin, ”Davison said.
Treasury Secretary Janet Yellen and Labor Secretary Marty Walsh urged states with high unemployment rates to continue issuing aid to concert workers and the long-term unemployed using federal funds allocated by the American Rescue Plan.
However, there seem to be few plans to do so. The U.S. Treasury Department declined to comment. The U.S. Department of Labor does not track state decisions because it does not oversee the use of those federal funds, a spokeswoman said.
Some economists are worried that cutting profits too soon, while people struggle to find work, could further slow the economic recovery.
For example, unemployed workers were more likely to find work in states that ended federal benefits in June than those who did not, according to a recent article written by researchers at Columbia University, University of Columbia. Harvard, the University of Massachusetts Amherst and the University of Toronto.
But about seven out of eight benefit recipients in these states were not yet re-hired in early August, resulting in an aggregate decrease of approximately $ 2 billion in household spending.
Tammy Dotson, 52, has had to cut spending after South Carolina officials withdrew federal benefits in June. Dotson, who fixed rental homes before the pandemic, has difficulty negotiating, which he attributes to Covid-related fears about working in person.
“We’re struggling to pay our bills,” said Dotson, who was self-employed. “What about [people] who can’t get back to work or something stops them so they can’t look for work? “, he asked.
Factors beyond benefits
According to labor economists, factors beyond improved unemployment benefits may be playing a more important role in preventing many Americans from returning to work. Some, for example, have reassessed their job flexibility and career after months without work.
Danielle Miess, 30, a former travel agent in Philadelphia, does not want to return to a 9-5 job. She plans to rely on self-employment, including babysitting service, pet sitting, clothing sales and planning. holidays, to pay their bills when unemployment benefits end.
If you can’t make enough money to cover your expenses that way, you could also drive to Instacart, he said.
“I think I have enough backups to be able to be okay,” he said.
Danielle Miess, 30, decided she did not want to return to a traditional job after the pandemic.
Danielle Miess
Other people may remain on the sidelines because of the continuing risk to public health, childcare limitations, and insufficient wages or benefits, seconds to Fiona Greig, co-president of the JPMorgan Chase Institute.
Chenon Hussey, 42, received pandemic unemployment benefits after the pandemic dried up the work of his small motivational business in West Bend, Wisconsin. A few months ago, she found a part-time job as a mental health counselor for a county government, but her hours are not consistent week by week.
Hussey and her husband have four children at home, a 6-year-old boy and three teenage daughters, one with developmental disabilities. They worry that they may have to move their child with special needs to a group home if they cannot continue to pay out of pocket for the intensive care they need.
Chenon Hussey, left, and her husband are concerned about caring for her family, including a child with special needs, once federal unemployment insurance benefits end.
photography bgraves
“We don’t know what we’re going to do,” said Hussey, who also founded the Wisconsin Unemployment Action Group during the pandemic.
Her husband, a master welder, also lost his job during the pandemic, but was able to take advantage of state unemployment. Still, his weekly checks will drop by $ 300 when profits end this weekend. According to Hussey, he has applied for jobs but has yet to find anything suitable.
“Every job he’s applied for has meant a pay cut of $ 20 an hour,” Hussey said. “This is not worth it.
“That would cost our family more than it would earn.”
Disclosure: NBCUniversal is the parent company of Universal Studios and CNBC.