A woman waits in a line 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 jobless to a historic degree last year, when the U.S. was in the throes of its most rapid economic downturn in history. The CARES Act, passed in March 2020, raised weekly jobless benefits by $600 a week (and later, $300 a week), offered aid to workers typically ineligible for traditional state benefits, such as self-employed, gig workers and part-timers, and extended how long people could collect aid.
Congress twice extended the programs, last December and again this March, but opted not to do so a third time.
That means about 9 million people are poised to lose those benefits by Labor Day, according to an estimate from The Century Foundation. Another 3 million or so will see their weekly benefits reduced.
Families are scared of what comes next.
“It is going to leave some folks in a bad situation,” Sylvia Allegretto, an economist and co-chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley, said of this weekend’s unemployment cliff.
“The economy, for many reasons, has not been fully recovered and won’t be for quite a while given this unfortunate but massive surge in Covid we’re seeing across the country,” she added.
The delta variant has added pressure to an already uneven economic recovery. The U.S. added 235,000 jobs in August, a marked slowdown from the roughly 1 million in both June and July.
Disincentive to work?
Of course, some economists believe the programs should end now, arguing that enhanced federal benefits offer an incentive to stay home rather than look for work. White House officials also recently signaled that federal benefits should cease as planned in most states.
There were a record 10 million job openings in June, which exceeds the number of officially unemployed individuals. That dynamic has led some economists to question why those who are out of work aren’t rushing in to take available jobs.
“It’s hard to justify having a program that’s encouraging people not to work at the same time employers are struggling to keep their business [going],” said Rachel Greszler, a research fellow in economics, budget and entitlements at the Heritage Foundation, a right-leaning think tank.
About half of U.S. states, primarily led by Republican governors, withdrew from most or all of the federal programs in June or July to encourage people to jump back into the labor market.
“I think it’s [a] misjudgment,” said Aaron Davison, a 28-year-old unemployed Orlando resident. “I was grateful for my job.”
Florida ended a $300-a-week federal supplement to benefits in June; the remaining programs lapse this weekend.
Davison, who had been a turnstile attendant at the Universal Studios Florida theme park, has been using unemployment benefits to help support his parents, with whom he lives and who are unable to…
Read More: End to federal unemployment benefits leaves many uncertain and scared