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Two critical unemployment programs are set to expire at the end of the year, potentially leaving millions of Americans vulnerable to eviction and hunger and threatening to short-circuit an economic recovery that has already lost momentum.
As many as 13 million people are receiving payments under the programs, which Congress created last spring to expand and extend the regular unemployment system during the coronavirus pandemic. Leaders of both major parties have expressed support for renewing the programs in some form, but Congress has been unable to reach a deal to do so. It remains unclear how the results of Tuesday’s election will affect prospects for an agreement.
That means that for now at least, people like Randy Williams must prepare for the possibility that they are weeks away from losing their only income.
Mr. Williams, 56, lost his job as a manager at a Memphis-area Cracker Barrel in the first weeks of the pandemic. His state jobless benefits ran out last month, leaving him to rely on a 13-week extension under the federal Pandemic Emergency Unemployment Compensation program, which ends in late December.
Already, Mr. Williams is struggling to get by on his $275 weekly benefit check, the maximum allowed in Tennessee. He has fallen behind on rent, racked up thousands of dollars in credit card debt and turned to a food pantry run by a church.
Even with the benefits, “I may have got behind on this or that, robbing Peter to pay Paul this month,” he said. “But without it, I’m dead in the water.”
The expanded unemployment programs are some of the last vestiges of the trillions of dollars in aid that Congress provided through a series of emergency measures in the spring. That spending — which included direct checks to most U.S. households, $600 a week in supplemental unemployment benefits and hundreds of billions of dollars in support for small businesses — offset the pandemic’s financial toll for many families, and helped fuel an economic recovery that was initially stronger than many forecasters expected.
Much of that assistance expired over the summer, however. Economic gains have slowed significantly since then, and studies have found that millions of Americans fell into poverty as aid dried up. Employment data released Friday showed that the number of people out of work for more than six months, the standard threshold for long-term unemployment, rose 1.2 million in October, to 3.6 million.
The year-end benefits cliff could be even more damaging. Many families have depleted any savings they built when the $600 supplement was available. A partial federal eviction moratorium is scheduled to expire at the end of the year, although it could be extended. And benefits checks won’t just shrink, as they did over the summer — they will disappear.
“The safety net still has kind of held up until now, and I think we have been maybe lulled into a sense of complacency,” said Andrew Stettner, an expert on unemployment benefits at the Century Foundation, a progressive policy research group. “We’re just putting people in this really precarious financial position where the damage of unemployment can just hit really hard.”
Nearly four million Americans are receiving benefits under the pandemic compensation program. That number has doubled in the past month and is expected to keep rising as more people reach the end of their state benefits, which last 26 weeks in most of the country.
If the program ends at the end of the year, some workers will be able to continue to receive benefits under a federal program not tied to the pandemic. But those benefits aren’t available in some states, including Tennessee, and don’t cover some types of workers, like freelancers.
Congress last spring created a separate emergency program, Pandemic Unemployment Assistance, to cover people left out of the normal unemployment system, such as freelancers and self-employed workers, as well as those unable to work because of pandemic-related child care issues and similar obstacles. There were 9.3 million people in that program in mid-October, according to federal data, although some experts on the unemployment system believe that figure overstates the total.
By any measure, millions are in danger of losing their benefits. Many economists warn that the harm would extend not just to individual workers but to the broader economy.
“Those households then have to dramatically cut back on their spending, they then fall further behind on their rent, and that means that their landlords suffer and the businesses that they would have been buying from will suffer,” said Jesse Rothstein, an economist at the University of California, Berkeley.
Conservative economists have long argued that unemployment benefits can be counterproductive because they discourage recipients from seeking or accepting jobs. That argument has been persuasive with many Republican lawmakers, who fought to end extended benefits during the last recession a decade ago and who have been skeptical of offering more generous benefits during the current crisis.
Progressives, including Mr. Rothstein, have countered that the disincentive effects of benefits are small, especially when jobs are scarce, and that giving workers a lifeline lets them seek out better jobs. In recent years, researchers have also used new data sources to study what happens when benefits run out, and have found clearer evidence that losing benefits creates significant hardship for families.
Bruce Meyer, a University of Chicago economist and longtime critic of unemployment benefits, said he remained unconvinced by many of the traditional progressive arguments for unemployment insurance. But he said he found the new data compelling.
“Unemployment insurance does not help you get a better job — it keeps you out of work and lets your skills deteriorate,” he said. “But it keeps you from starving.”
The threat of losing benefits is amplified during a pandemic. Matt Weis, chief program officer at the National Able Network, a Chicago-based nonprofit organization, said he had long counseled job seekers to look for a “survival job” — one that will pay the bills while they look for more permanent work. But that is a harder argument to make when many sources of stopgap work, like seasonal retail and fast food, could carry health risks.
“It’s just putting people in a really, really tricky situation,” Mr. Weis said. “Do I preserve my health and the health of my family by staying home and not working? OK, fine, how do I do that? I’ve got bills to pay.”
Gail Kulwicki, a home health aide in Muskegon, Mich., has a history of health problems, so when the coronavirus began spreading in the United States, her employer told her to stop coming into work. She has been unemployed ever since.
The $1,200 stimulus check and $600 a week in extra unemployment benefits were a help early on. Ms. Kulwicki, who is 71 and lives with her adult son, was able to pay off some bills and pad her savings. But with that money gone, she is getting by on her remaining unemployment benefits, plus Social Security and a small pension. It is enough to pay her bills, but barely.
“With the unemployment gone, we would have to find other ways to bring income in or we wouldn’t be able to pay the bills,” she said. “It would be pay the rent, pay the electric and, OK, I guess we’re eating ramen noodles for the month.”
With her health concerns, going back to work in home health care is off the table for the time being. So are many other types of work. So she and her son are driving for the food-delivery app DoorDash on alternating evenings, trying to cushion the loss of her benefits next month.
A registered Democrat, Ms. Kulwicki voted for former Vice President Joseph R. Biden Jr. in the presidential election, but is angry at both parties for failing to reach an agreement to help people like her.
“I don’t appreciate Washington playing politics with my life,” she said.
Congress may still extend the programs before they expire. Senator Mitch McConnell, the majority leader, said Wednesday that a new aid package would be the Senate’s top priority now that the election was over, although he has provided few details on what would be included.
“Hopefully the partisan passions that prevented us from doing another rescue package will subside with the election,” he said. “And I think we need to do it, and I think we need to do it before the end of the year.”
But negotiations have repeatedly failed, and it remains far from certain that this attempt will succeed. The aftermath of the election — including President Trump’s refusal so far to accept the result, and runoff elections in Georgia that will decide control of the Senate — is likely to capture Washington’s attention for weeks, and Mr. Trump may see little incentive to push for a stimulus deal that would primarily help his successor.
Aneta Markowska, chief financial economist for the investment bank Jefferies, said that while she expected another aid package eventually, any delay could be costly, as businesses fail and workers leave the labor force, in some cases permanently.
“Timing does matter,” Ms. Markowska said. “There is the potential for permanent scarring during that time that is then that much harder to reverse. It’s not simply a matter of turning the lights back on.”
Victoria Passmore is trying to avoid letting short-term unemployment turn into a long-term setback.
When she lost her job at a health information company in June, Ms. Passmore, a 33-year-old single mother in Chicago, decided to take the opportunity to change careers. She has been working toward her certification as an information technology specialist, and has started a business with her sister selling healthy juices. She is counting on those to support her once her unemployment benefits run out.
“I hate to say it, I don’t really have too much faith in the government we have right now, so I am not expecting any extension,” Ms. Passmore said. “We have to figure it out for ourselves. There’s not much help coming from higher up.”
Source: The NY Times
Keyword: Millions Face Loss of Jobless Aid: ‘Without It, I’m Dead in the Water’