A woman waits in line outside a job center in Frankfurt, Kentucky in June.
Bryan Woolston | Reuters
Unemployment benefit in the event of a pandemic
The federal government expanded the safety net for the unemployed at an historic rate last year when the US experienced the fastest economic downturn in history. The CARES bill, passed in March 2020, increased weekly unemployment benefits by $ 600 (and later $ 300 a week) and offered workers who are normally not eligible for traditional government benefits, such as self-employed, gig workers, and part-time workers, Help on. and extends how long people can raise funds.
Congress extended the programs twice, last December and again in March, but waived a third time.
That means around 9 million people will lose these benefits by Labor Day, according to an estimate by the Century Foundation. Another 3 million or so will see their weekly benefits reduced.
Families are afraid of what's next.
"It's going to put some people in a bad position," said Sylvia Allegretto, economist and co-chair of the Center on Wage and Employment Dynamics at the University of California, Berkeley, of the unemployment cliff this weekend.
"The economy has not fully recovered for many reasons and is nowhere near given this unfortunate but massive spike in Covid that we are seeing across the country," she added.
The delta variant has put the already uneven economic recovery under pressure. The US created 235,000 jobs in August, a significant slowdown from around 1 million in June and July.
No incentive to work?
Of course, some economists believe the programs should end now, arguing that improved federal benefits provide an incentive to stay home instead of looking for work. White House officials also recently signaled that federal benefits should cease as planned in most states.
In June there was a record 10 million job vacancies, outperforming the officially unemployed. This dynamic has led some economists to wonder why those who are out of work are not rushing to take available jobs.
"It's hard to justify having a program that encourages people not to work while employers struggle to keep their businesses going," said Rachel Greszler, Heritage Foundation Research Fellow in Economics, Budget and Claims Right-lopsided think tank.
About half of the US states, which are primarily run by Republican governors, pulled out of most or all federal programs in June or July to encourage people to get back into the job 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 allowance in June; the remaining programs expire this weekend.
Davison, who was the turnstile attendant at Universal Studios Florida theme park, used unemployment benefits to support his parents, with whom he lives and who cannot work for medical reasons. Although he has been actively applying for jobs for several weeks, he has not yet landed anything.
With no unemployment or unemployment benefits, he expects to be able to rely on the money raised by a GoFundMe page to make ends meet.
"(One) extension could have saved families from financial ruin," said Davison.
Treasury Secretary Janet Yellen and Secretary of Labor Marty Walsh urged states with high unemployment to continue to provide aid to gig workers and the long-term unemployed using federal funds from the American Rescue Plan.
However, there seem to be few plans to do so. The US Treasury Department declined to comment. The U.S. Department of Labor doesn't track government decisions because it doesn't monitor the use of those federal funds, a spokeswoman said.
Some economists fear that cutting benefits too early while people are struggling to get a job could further slow economic recovery.
For example, unemployed people were more likely to find themselves in states that stopped state benefits in June compared to those who didn't, according to a recent author by researchers at Columbia University, Harvard University, the University of Massachusetts Amherst and the University Toronto paper.
But about 7 out of 8 beneficiaries in these states were still not reinstated by early August, which resulted in a decrease in household spending of around $ 2 billion.
Tammy Dotson, 52, was forced to cut spending after South Carolina officials withdrew federal benefits in June. Dotson, who set up rental apartments before the pandemic, is having a hard time doing business, which she attributes to Covid-related fears of personal work.
"We are struggling to pay our bills," said Dotson, who was self-employed. "What about those (people) who cannot go back to work or something is preventing them from looking for work?" She asked.
Factors beyond utility
According to labor economists, factors beyond improved unemployment benefits could play a bigger role in deterring many Americans from returning to work. For example, some have reassessed their job flexibility and career after months without work.
Danielle Miess, 30, a former Philadelphia travel agent, doesn't want to go back to a 9-to-5 job. She plans to rely on freelance work, including housekeeping, pet care, clothing sales, and vacation planning, to pay her bills when her unemployment benefits run out.
If she can't make enough money this way to cover her expenses, she could also ride for Instacart, she said.
"I think I have enough backups that I should be fine," she said.
Danielle Miess, 30, decided she didn't want to return to a traditional job after the pandemic.
According to Fiona Greig, co-president of the JPMorgan Chase Institute, others could still be on the sidelines due to ongoing health risks, restrictions on childcare, and inadequate pay or benefits.
Chenon Hussey, 42, received pandemic unemployment benefits after the pandemic dried up for her small motivational speaker business in West Bend, Wisconsin. A few months ago she found a part-time job as a mental health advisor with a county government, but her working hours are not consistent from week to week.
Hussey and her husband have four home living children, a 6 year old and three teenage daughters, one with developmental disabilities. They fear that they will have to take their disabled child to a group home if they cannot continue to pay for the intensive care they need out of their own pocket.
Chenon Hussey, left, and her husband are concerned for their families, including a child with special needs, when federal unemployment benefits expire.
"We don't know what we're going to do," said Hussey, who also co-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 fall back on state unemployment. Still, his weekly checks will drop $ 300 when the services end this weekend. He has applied for jobs but hasn't found anything suitable, says Hussey.
"Every job he applied for was a $ 20 hourly wage cut," Hussey said. "That `s not worth it.
"That would cost our family more than it would gain."
Disclosure: NBCUniversal is the parent company of Universal Studios and CNBC.