Extra unemployment benefits ending soon, leaving millions without an income

Millions of Americans are poised to lose their unemployment benefits in less than one week, as the massive safety net that Congress put in place in the early days of the coronavirus pandemic continues to unravel.  

A report published by the left-leaning Century Foundation found that 7.5 million workers face the loss of jobless aid on Sept. 6 – Labor Day, the official cut-off date for three relief programs that were first created in March 2020 and renewed twice by Congress as the virus forced an unprecedented shutdown of the nation's economy, pushing unemployment to the highest level since the Great Depression. 

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In addition to providing workers with an extra $300 a week on top of their regular state benefits, the programs offered aid to workers who were not typically eligible and extended state unemployment benefits once they had been exhausted.

And as the economy reopens, companies have complained about a lack of available workers: There are still some 5.5 million unemployed Americans, despite the staggering 9.2 million open jobs. 

Already, 23 states – all but one of which is led by a Republican governor – have ended the unemployment programs, a move intended to help businesses that are struggling to hire workers. (Although they attempted to terminate the programs, Arkansas, Indiana and Maryland were ordered by state judges to reinstate them.) 

Critics argue that other factors, such as a lack of child care, are the reason for lackluster hiring and have said that opting out of the relief program before it's officially slated to end will hurt unemployed Americans, leaving them with no income as they search for a new job. 

The early withdrawal from the programs fueled a $2 billion cut in household spending, according to a paper authored by economists and researchers at Columbia University, Harvard University, the University of Massachusetts Amherst and the University of Toronto. 

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At the same time, those states saw larger job gains, with their collective employment rising 4.4 percentage points compared to states that continued to participate in the relief programs. However, that represents about one in eight unemployed individuals who were able to find jobs; the remaining seven were not only out of work, but without an income.

Despite some last-minute rumblings from progressives about extending the federal aid programs as part of a massive $3.5 trillion reconciliation bill that Democrats are currently crafting, there appears to be little momentum on Capitol Hill to do so, even with the spread of the highly contagious delta variant. 

Such an effort would also most certainly meet opposition from moderate Democrats, many of whom rebelled against extending other coronavirus relief provisions, such as a federal ban on evictions.

Andrew Stettner, a senior fellow at the Century Foundation, called the impending unemployment cliff a "5-alarm fire that we're treating as if the danger has passed."

"It is policy negligence to allow a record number of workers to be completely cut off from unemployment benefits as the delta variant surges, jeopardizing the economic progress we have made," Stettner tweeted. "The Biden administration and states must move with greater urgency to provide a safety net and aggressive reemployment assistance to those being summarily dropped from the unemployment rolls."  

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Two weeks ago, the Biden administration signaled the pandemic relief programs would end as planned in September, but encouraged states with high jobless rates to repurpose federal relief money in order to extend the aid.

In a letter addressed to Democratic chairmen in the House and Senate, Treasury Secretary Janet Yellen and Labor Secretary Marty Walsh said that President Biden still believes it's "appropriate" for the three relief programs to end on Labor Day. But they stressed that some states with persistently high unemployment rates should consider continuing the relief programs using the $350 billion in state and local government aid allocated by the American Rescue Plan.

"Even as the economy continues to recover and robust job growth continues, there are some states where it may make sense for unemployed workers to continue receiving additional assistance for a longer period of time, allowing residents of those states more time to find a job in areas where unemployment remains high," they wrote.  

That could include blue states such as New Mexico, Connecticut, Nevada, New York and California, where the jobless rate is still above the national average of 5.4%, according to Labor Department data. 

The average state unemployment benefit is about $330 per week. With the federal supplement, Americans are receiving about $630 in weekly unemployment benefits (for comparison, that's about $32,000 annually, or roughly double the nation's minimum wage).