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Two programs – one that provides unemployment assistance to the self-employed and concert workers, the other to people unemployed for more than six months – will expire on Monday. As a result, 8.9 million people will lose these weekly benefits, according to an estimate from Oxford Economics.
An additional 2.1 million people will lose an additional federal unemployment benefit of $ 300 per week, which also expires on Monday. These beneficiaries will however continue to receive unemployment benefits from the State.
The cuts come as employers regularly hire and fire fewer workers. The number of people seeking unemployment assistance fell from 14,000 last week to 340,000, the Labor Department said Thursday, to the lowest level since the pandemic in March last year.
Yet the number of people who will lose their financial support from next week is much higher than in previous cuts to extended unemployment assistance. After the Great Recession of 2008-2009, for example, when unemployment aid was extended to 99 weeks, this extension lasted until 2013. When this benefit program finally ended, 1.3 million only people were still receiving help.
The current expanded unemployment assistance programs were created in financial bailout legislation that was enacted after the outbreak of the pandemic and was extended by President Joe Biden last March. Lawmakers generally expected that by September, with more Americans vaccinated and employers stepping up hiring, the pandemic would end and the economy would fully recover.
As the economy rebounds, economists fear the delta variant will slow hiring and growth. When the government releases the August jobs report on Friday, some analysts expect it to show a slowdown in hiring.
The elimination of unemployment checks next week for millions of people will abruptly wipe out a vital source of income for many.
“We were a thriving middle class family 18 months ago,” said Chenon Hussey of West Bend, Wisconsin. “We’re going to be off the map” when federal benefits end.
Hussey, 42, who works part-time for a county government, is trying to revive a motivating small communications company that has been crushed by the pandemic. Her husband, a master welder, was fired three times during the health crisis.
Federal benefits, she said, have been “the bridge to absolute poverty for us. Without them, Hussey said, their monthly income will drop by $ 2,800. They will not be able to afford the intensive care their daughter, who has an intellectual disability, needs. They may have to move her to a group home, “which we never wanted for her.”
Their cars are paid off, but the mortgage remains a struggle.
“It’s going to take us a while to get through it,” she said. “We’re positive that we’re both ready to do what we need to do.”
Twenty-five states have already ended the weekly supplement of $ 300 and almost all have also stopped the two federal emergency programs, ending payments for about 3.5 million people, estimates Oxford Economics. These early cuts came after some companies complained in the spring and summer that they couldn’t find enough people to hire.
Almost all 25 states are led by Republican governors – with the exception of Louisiana – and most have claimed that the additional $ 300 per week federal assistance discourages the unemployed from taking a job. Posted jobs – a record 10.1 million in June – have grown faster than applicants lined up to fill them.
Yet research has found that the first cuts to federal unemployment assistance resulted in only a small increase in hiring at most. A study by Kyle Coombs, an economist at Columbia University, and Arindrajit Dube, an economist at the University of Massachusetts, Amherst, found that in states that maintained federal benefit programs, 22% of people receiving benefits in April had found work by the end of July. In states that cut aid, that figure was almost 26%, a modest increase.
Other research has found even less impact: In a report last week, economists Peter McCrory and Daniel Silver of JP Morgan found a “zero correlation” between job growth and state decisions. ‘abandon federal unemployment assistance, at least so far. They warned that the loss of income due to the removal of unemployment checks “could itself lead to job losses, potentially offsetting any gain” resulting from encouraging more people to return to work. .
Most economists cite other factors that have made it more difficult for companies to fill jobs at the wage they offer: many unemployed people do not want to work in service industries such as restaurants and hotels, for fear of contracting COVID-19. In addition, many women have left the workforce to care for children and have struggled to find or pay for child care.
Andrew Stettner, a senior researcher at the Century Foundation, a think tank, estimates that the expiration of benefit programs will cut aid payments by $ 5 billion per week, which will likely weaken spending.
“We’re all tired of the pandemic, but that doesn’t mean we’re giving up on taking the steps we need to keep people afloat,” Stettner said.
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