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WASHINGTON – Expanded unemployment benefits that kept millions of Americans afloat during the pandemic expired on Monday, putting in place the abrupt cut in aid to 7.5 million people as the Delta variant shakes up the pandemic recovery .
The end of aid came without objection from President Biden or his top economic advisers, who have found themselves embroiled in a political struggle for the benefits and are now relying on further federal aid and a fall recovery. of hiring to prevent vulnerable families from foreclosing and feeding themselves. lines.
The $ 1.9 trillion economic aid package Mr Biden signed in March included extended and expanded benefits for the unemployed, such as a $ 300 a week federal supplement to state unemployment benefits, additional weeks of assistance for the long-term unemployed and the extension of a special program to provide benefits to so-called agency workers who traditionally do not qualify for unemployment benefits. Monday’s expiration means 7.5 million people will lose their benefits entirely and another 3 million will lose the weekly supplement of $ 300.
Republicans and small business owners have attacked the aid extension, saying it has held back economic recovery and fueled a labor shortage by discouraging people from looking for work. Liberal Democrats and progressive groups have pushed for another round of aid, saying millions of Americans remain vulnerable and need help.
Mr Biden and his advisers have pointedly refused to call on Congress to further extend the benefits, a move that reflects the prevailing view of the takeover in the administration and the president’s desire to focus politically on supporting its broader economic agenda.
The president’s top economic advisers say the economy is completing a shift from federal aid to the labor market: as support for the March stimulus bill wanes, they say, more more Americans are on the verge of returning to work, drawing paychecks that will fuel consumer spending in place of unemployment benefits, direct checks to workers, and other government aid.
And Mr Biden is pushing Congress this month to pass two halves of a multibillion-dollar agenda focused on long-term economic growth: a bipartisan infrastructure bill and a spending bill. bigger supporter to invest in child care, education, carbon reduction and more. This push leaves no political oxygen for a short-term additional aid bill, which White House officials insist the economy does not need.
Administration officials say the money that continues to flow to Americans through the March law, including new monthly payments to parents, will continue to support the social safety net even as federal aid expanded unemployed expires. Mr Biden called on some states – those with high unemployment rates and a willingness to continue helping the unemployed – to use aid funds from the March law to help the long-term unemployed. So far, no state has announced its intention to do so.
Mr Biden’s chief of staff Ron Klain told CNN’s “State of the Union” on Sunday that the March law also allowed states to help unemployed people with job bonuses, vocational training and advice.
“We believe the jobs are there,” Klain said, “and we believe states have the resources they need to move people from unemployment to jobs.”
Mr Biden has faced criticism from both left and right on the issue, and he has responded with a balancing act, supporting the benefits as approved by Congress but refusing to push for extend them – or defend them against attacks by state governments.
Throughout the summer, business lobbyists and Republican lawmakers have called on the president to remove the benefits sooner, blaming them for the difficulties business owners have in hiring workers, especially in lesser industries. well paid like the hotel business. Shortly after the backlash began, Mr Biden defended the benefits, but called on the Labor Department to ensure that unemployed people who turned down job offers would lose their help.
But about half of the states, almost all of them led by Republican governors, decided to cut benefits early on their own. Mr Biden and his administration did not fight them, angering progressives. The administration is essentially extending this policy until the fall, calling only for willing states to replace expired aid.
“I don’t think we necessarily need a comprehensive policy for unemployment benefits at this point in the country,” Labor Secretary Martin J. Walsh said Friday, “because states are in different places. “.
Privately, some administration officials have expressed openness to the idea that economic research will eventually show that the benefits have had some sort of chilling effect on workers’ decision to take a job. Critics of the additional unemployment benefits have argued that it discourages people from returning to work at a time when there are record numbers of job openings and many companies are struggling to hire.
Evidence so far suggests that programs play at most a limited role in excluding people from the labor market. States that ended the benefits earlier, for example, saw little to no upturn in hiring compared to the rest of the country.
Even in industries that have had the hardest time finding workers, many people don’t expect a sudden surge in job applications after benefits expire. Other factors – childcare issues, fear of the virus, savings accumulated from previous waves of federal aid, and a broader overhaul of Americans’ work preferences in the wake of the pandemic – also play a role. role in preventing people from working.
“I think it’s a piece of the puzzle but I don’t think it’s the big piece,” said Ben Fileccia, director of operations and strategy for the Pennsylvania Restaurant and Lodging Association. “It’s easy to show, but I don’t think that’s the real reason.”
Progressives inside and outside Congress have become frustrated with the administration’s approach to benefits, warning that it could backfire economically. Job growth slowed in August as the Delta variant spread across the country.
“Millions of the unemployed will suffer when benefits expire on Monday, and it didn’t need to be,” Oregon Sen. Ron Wyden, chairman of the finance committee, said in a press release this week. last. “It is clear from the economic and health conditions on the ground that we should not be cutting benefits now. “
Elizabeth Ananat, an economist at Barnard College who has studied the impact of the pandemic on low-wage workers, said cutting benefits now, while the Delta variant has threatened to delay the recovery, is a threat to the both for workers and for the population as a whole. economy.
“We have this fragile economic recovery and now we are going to reduce the incomes of the people who need it, and we are taking dollars out of an economy that is still quite unstable,” she said.
Ms Ananat followed a group of around 1,000 low-income parents in Philadelphia, all of whom were working before the pandemic. More than half lost their jobs at the start of the pandemic last year. This summer, 72 percent were working, reflecting the strong rebound in the economy as a whole. But that still left 28 percent of their sample without work, whether it was because they couldn’t find a job or because of childcare or other responsibilities.
“We are entering a new school year where there will be a lot more uncertainty than there was this spring for parents,” Ms. Ananat said. “Employers are going to face a situation again where they have people who want to work, but what the hell are they supposed to do when their child is sent home to quarantine?”
Measures of hunger and other hardships have eased this year, as the labor market has improved and federal assistance, including the expanded child tax credit, has reached more low-income families. returned. But cutting benefits could change that, Ms. Ananat said. “In the absence of some sort of solution, this cliff is coming and this number will go up,” she said. “This is a large group of people who are going to be in a much worse condition.”
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