Millions face loss of jobless aid: ‘Without it, I’m dead in the water’

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 last week’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.

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Williams, 56, lost his job as a manager at a Memphis, Tennessee-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, 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 4 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 also 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 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,” 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.”