Millions of people are facing a dramatic financial cliff as every federal pandemic unemployment program is set to expire in less than one month.
Roughly 7.5 million Americans stand to lose all of their income from one of three federal programs scheduled to end this Labor Day weekend. Another 4.2 million will see their benefits cut down to just their state unemployment payments. While they’ll still receive some money, state unemployment benefits are often not enough to cover living expenses.
“We have been driving blindly toward a very large cliff,” says Andrew Stettner, a senior fellow at The Century Foundation and author of the think tank’s latest report on the subject. “We have never cut this many people off from benefits at once.”
The cutoff is coming at an especially difficult time, experts say, as the highly contagious delta variant of the coronavirus has caused the largest number of new cases in months, putting workers at risk once more.
Could federal unemployment benefits be extended once again? Experts caution those receiving unemployment benefits not to get their hopes up. But on the heels of a successful push by activists and policymakers to renew the CDC’s eviction moratorium and the Department of Education’s decision to extend the pause on student loan payments, many out-of-work Americans are now wondering whether pandemic-era unemployment benefits might live a little longer, too.
Why advocates want unemployment benefits extended
Congress has already twice extended pandemic unemployment benefits. Most recently, they passed the American Rescue Plan in March, which extended three key programs to assist workers who lost their jobs due to the pandemic:
- Pandemic Unemployment Assistance (PUA) which provides payments to those who otherwise don’t qualify for assistance like gig workers.
- Pandemic Emergency Unemployment Compensation (PEUC) for workers whose regular benefits have expired.
- Federal Pandemic Unemployment Compensation (FPUC) that gives people on state unemployment an additional $300 per week.
The new legislation pushed the expiration date for these programs from March 14 to Sept. 6, with the expectation that the unemployment rate would be reaching pre-COVID-19 levels by then. But monthly unemployment data released last week show that there are still 12.3 million workers relying on one of the three federal pandemic-related programs.
Some politicians believe the enhanced benefits have been a crutch that has dissuaded people from looking for work. But Stettner’s research implies this is not the case.
Nearly every state has already reinstated job search requirements for unemployed workers, meaning they must meet a minimum number of “work search contacts” with employers each week to collect their payments. But after those requirements returned, there wasn’t any jump in the number of people who have found employment. What’s more, in the 25 states where extended benefits were cut off early, economists have found no significant change in the speed of people re-entering the workforce. In some cases, employment actually declined.
“Anyone who has ever looked for a job knows you don't necessarily find one in a few weeks or a few months; it takes time,” Stettner says.
There are currently more jobs hiring than ever before in the U.S., but many of them only pay minimum wage — and that’s often not enough for someone to cover the expenses of paying their mortgage or rent. In fact, a 2021 report from the National Low Income Housing Coalition found that a full-time worker would need to earn $24.50 an hour on average in order to afford the median $1,295 rent for a two-bedroom apartment.
The money coming from unemployment programs is also currently putting approximately $6.5 billion dollars into the U.S. economy each week. After the benefits expire, unemployment will account for only $1 billion in spending, according to Century Foundation estimates. Suddenly pulling that money out could lead to a significant loss in revenue for businesses, slowing the progress of economic recovery, Stettner writes.
Will pandemic unemployment benefits be extended?
There are currently no official plans from congressional leadership to extend the pandemic unemployment programs or introduce new legislation.
Although he acknowledges that the recent extension of the CDC eviction moratorium was the result of last-minute pressure, Stettner expects that the unemployment benefits will indeed lapse for a period of time. For one, lawmakers won’t be around to extend it before the deadline; Congress will be in recess starting today through Sept. 17. Although he predicts that there will be at least some momentum when Congress returns to reinstate those benefits retroactively, Stettner is encouraging people to brace themselves for the impact of being cut off.
“It’s important to be very clear, because people could be clinging to the hope that this will be extended again: There is no political momentum for an extension right now,” he says.
For the 7.5 million people whose main source of income during the pandemic is about to be cut off, Stettner says to prepare for the loss of income. Make sure you know the application process for other available benefits like food stamps and Medicaid if you aren’t already enrolled.
“Don't wait until the last minute to prepare,” Stettner says.