More than nine million Americans will lose their unemployment benefits and millions more will see their weekly incomes fall as the multitude of federal jobless unemployment assistance programs expire next week.
Three programs covering a total of 12.1 million people will end Monday without action from the White House or Congress.
Twenty-six states pulled out of at least some of those programs earlier this summer as companies struggled to cover a record nine million jobs.
But there are still 5.4 million workers, contractors and other workers without traditional unemployment insurance coverage who will lose their weekly benefits early next week. Another 3.9 million Americans receiving extended aid will see these payments disappear as well on Monday.
And 3.9 million separated Americans will no longer receive a $ 300 weekly supplement to other job assistance programs, leaving them with less money.
In addition, the August job report released on Friday showed a significant slowdown in the hiring rate, indicating a tougher labor market in September.
President Biden
Joe BidenElder vows to replace Feinstein with a Republican if he wins the California election. Night Defense and National Security: Outside Afghanistan, but trapped in a lemon.Moderate Democratic lawmakers and virtually all Republicans have argued that it is time for additional support to expire after several months of rapid employment growth, through August, and for inflation to remain at uncomfortable heights. Recent studies have also shown a marked increase in employment growth in states that pulled out of these unemployment insurance (UI) programs, but with a limited impact on labor force participation.
“The question is,‘ Does the expanded UI substantially slow down employment growth? “And I think so,” said Adam Ozimek, chief economist at Upwork.
“I think the end of the UI expansion will accelerate employment growth and get people back to work, but it will not end the economic damage from the pandemic.”
While economists have been fighting for months over how much they have curbed labor gains from federal programs, they broadly agree that it is not the only factor that keeps potential workers on the sidelines. Approximately 5.6 million Americans said they could not work because their employer closed or lost their business due to the pandemic, and another 1.5 million said they were not even able to look for work due to of a pandemic-related restriction, according to the August employment report released Friday by the Department of Labor.
The sharp drop in labor earnings last month, driven almost entirely by the rise in COVID-19 cases, has also raised alarms among those who see little benefit in withdrawing aid.
“It’s not because we’re seeing any kind of change in the way people work. These benefits now expire because they are tied to an arbitrary political term, ”said Rakeen Mabud, chief economist at Groundwork Collaborative, a progressive economic research and non-profit activism.
“The fact that we are collectively choosing to play with life and human beings in this way is downright sad,” he continued.
Labor Day expiration was part of an agreement to consolidate moderate Democrat support for an extension of federal employment aid through the 1.9 coronavirus relief bill trillions of dollars approved and subscribed in March. At the time, the economy was on the verge of massive growth with widely available COVID-19 vaccines in early April and a summer full of pre-pandemic activities that could ignite the labor market.
After reports of scarce jobs in March and April ended some of those hopes, several dozen Republican governors withdrew their states from federal unemployment programs, arguing that new unemployment benefits were slowing recovery. But economists who have studied the impact of these decisions say they had mixed results.
Fiona Greig, co-president of the JPMorgan Chase Research Institute, said the elimination of the $ 300 supplement in those states led to a 0.5 percent increase in employment, according to research led with a team of economists.
“The marginal impact is detectable, but not as great,” Greig said, adding that the loss of weekly income had a much greater impact on these households.
“We’re talking about a big loss of spending on daily spending among people who don’t go back to work in exchange for a small incremental increase in people who go back to work.”
Another paper from a team of economists from Columbia University, the University of Massachusetts Amherst, Harvard University and the University of Toronto found a larger increase in studying the impact of the elimination of two of the three main programs.
The document found an increase in employment of 4.4 percentage points among workers receiving unemployment benefits in April in states that withdrew the two programs. These workers still experienced sharp falls in income, although they caused “a large immediate decrease in consumption.”
Goldman Sachs economists highlighted a similar dynamic in an August study: employment rose in states that made federal profits, but labor force participation remained flat.
“This suggests that many workers are left out for non-financial reasons, such as concern for Covid, and may take a long time to return to the workforce even after UI benefits end,” they wrote.
Goldman’s team projected that eliminating federal benefits nationwide would create 1.5 million jobs before the end of 2021, and mainly because workers who have lost all their benefits find jobs. low-paid leisure and hospitality.
However, supporters of an extension counter that would mean an increase in COVID-19 cases, the expiration of the federal eviction ban and the end of the summer travel boom could still block millions in the labor market.
“Letting these benefits expire in the current circumstances and the current uncertainty we are experiencing is tantamount to forcing people to fall through the cracks,” Mabud said.
“It’s not just letting people fall through the cracks.”