Unemployment cliff looms as 9.1 million Americans expected to lose aid by Labor Day

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Pamela Mohar has scheduled the end of her unemployment benefits in the event of a pandemic: her last check having arrived in early September, she and her partner prepaid their bills until October. She is not sure what will happen next.

“Once the last check is received, it will be devastating not knowing where the next check will come from,” Mohar, 37, who graduated from Eastern Michigan University in April with a master’s degree in creative writing, told CBS MoneyWatch.

Mohar, of Ann Arbor, Mich., Said she has been looking for a job since last fall, when working as a graduate assistant, but has been unlucky so far. Before returning to school, she had worked in retail and as a bartender – an experience she highlighted when applying for jobs. But she suspects employers are unwilling to hire someone they believe could change jobs if a better job comes along.

Mohar tinkered with part-time work, but still qualifies for Pandemic Unemployment Assistance (PUA), a new program created by lawmakers in 2020 to provide unemployment assistance to workers who typically do not have right to the allowance, such as concert workers and part-time workers. Once the PUA is over, these workers will no longer be eligible for any regular unemployment program.

Michigan resident Pamela Mohar said the end of enhanced pandemic aid benefits in September would be “devastating” for her.

Pamela mohar


PUA is one of many pandemic unemployment programs that end on September 6, which happens to be Labor Day. That will cut 9.1 million unemployed people out of support, according to an estimate by the left-wing Century Foundation.

This “cliff” of benefits will disproportionately harm workers of color and women with children, the latter being more likely than men to reduce their work during the pandemic due to a lack of remote daycares and schools, noted Andrew Stettner, senior researcher at Century Foundation.

“There has been almost no discussion of real policies to avoid this or change this, and like a lot of things in the pandemic, the scale is much bigger than in the past,” Stettner said. “It’s almost like a problem that didn’t have to happen.”

It doesn’t look like a lifeline is in the works. CBS News has contacted officials in all 50 states to see if they will extend the enhanced $ 300 benefits or other unemployment programs in the event of a pandemic, but the vast majority said they would return to lower unemployment benefit levels before the pandemic starting next week.

Call for reform

The Biden administration earlier this month said pandemic unemployment programs will end as planned on September 6, Even like coronavirus cases related to Delta variant ascend. A White House spokesman said on Friday that there were no plans to reassess the end of additional unemployment benefits.

“The twenty-two trillion dollar savings run largely on momentum, and we have strong momentum moving in the right direction on behalf of the US workforce,” said Jared Bernstein, member of the US workforce. White House Council of Economic Advisers.

Delta variant undermines some of that momentum, with job growth greatly slowed down in August as COVID-19 infections skyrocketed. Investment bank Morgan Stanley estimated Thursday that the economy will grow at an annual rate of 2.9% in the third quarter, down sharply from its previous forecast of 6.5%. This decline largely reflects a decline in federal aid spending and supply chain bottlenecks.

Nonetheless, Treasury Secretary Janet Yellen and Labor Secretary Marty Walsh are calling for reforms, noting that the pandemic has exposed “serious problems” with the country’s unemployment system.

Reforms are unlikely to come in time to help the millions of households that will lose their unemployment assistance early next month, said Jenna Gerry, senior counsel for the National Employment Labor Project.

“We will see this cliff come on September 6 and people will be left without support for a while,” she said. “What we need is long-term reform and we need it immediately – we cannot continue with these temporary programs.”

Some experts are in favor of changing unemployment so that additional benefits automatically come into effect when the unemployment rate rises and remains high or is high for certain groups, such as black workers. The country’s unemployment rate stood at 5.2% in August – below its pandemic peak of 14.8% in April 2020, but still above the pre-pandemic rate of 3.5%.

And hiring across the country dramatically declined in August as an increase in COVID-19 cases caused by the Delta variant has slowed the recovery, raising concerns about headwinds for the economy. Employers added 235,000 jobs last month, well below the roughly 700,000 expected by forecasters.

Advocates for the unemployed also say pandemic unemployment programs should be extended until the pandemic is over.

“The end of the pandemic for workers will be marked by the resumption of all pre-pandemic jobs (we are still short of 5.7 million jobs from February 2020) AND an unemployment rate comparable to February 2020”, Stéphanie Freed, Executive Director of ExtendPUA.org, said in a statement.


Families struggle to pay their bills as the pandemic …

02:05

“Knife in the chest”

Among the government’s temporary fixes to the unemployment system was help for parents whose children attended a distant school, an issue that affected millions of families who suddenly had to juggle distance education and work.

About 1.8 million women have left the labor market since the start of the public health crisis, pushing the female participation rate to its lowest level since 1988, according to at the National Center for Women’s Rights.

Among them is Alicia O’Brien, a construction worker in San Francisco. She said she lost her job at the start of the pandemic, but remained unemployed to help her three children – all under the age of 12 – with distance education. Because two of them have asthma and cannot yet receive the COVID-19 vaccine, she kept them at home even when schools returned to in-person teaching.

But with the end of unemployment, she said she had to go back to work so that she and her fiance could pay the bills. But she is worried about the health of her children and whether she will be able to continue working if their school is closed due to the latest virus outbreak.

“The end of unemployment is a knife in the chest,” O’Brien said. “It’s ‘Get back to work’ and I have no choice.”

In his opinion, the federal government should extend unemployment assistance until children under 12 can receive the COVID-19 vaccine.

“I feel very frustrated,” said O’Brien. “The amount of energy, time and life that every parent has gone through quitting their job, staying home 24/7 with their kids, not being a teacher, trying to keep up with a distance learning, trying to help teachers who are trying to help their child Why not stretch [unemployment] a little longer? “

Cuts in benefits could hurt consumer spending

More than half of U.S. states have already cut unemployment assistance in the event of a pandemic, giving a glimpse of what may be in store for the rest of the nation. Twenty-five of those 26 states that cut benefits from June are led by Republican governors, who have argued that the improved payments are keeping workers on the sidelines.

For now, the results of the cessation of this aid do not confirm such concerns. Instead of overburdening jobs, the first 12 states that cut aid saw employment growth comparable to that of states that have maintained aid, according to a study.

In a recent analysis of 22 states that cut unemployment assistance in June, only 1 in 8 unemployed people had found a job by early August, according to economists at Columbia University, Harvard and other institutions. While this reflects a modest gain, there was a downside: These states saw a $ 2 billion drop in consumer spending due to the loss of unemployment assistance.

The September 6 cut will likely have a quadruple impact on consumer spending, with a spending cut of $ 8 billion in September and October, researchers predict.

The economic rebound could face headwinds due to the loss of unemployment assistance paid to millions of households, noted Stettner of the Century Foundation, who estimates that the expiry will result in a loss of $ 5 billion. aid currently paid weekly to the unemployed.


Labor secretary in the labor market, end of allowances …

03:44

“It’s money that you take out of the economy,” he said. “From what we’ve seen so far, there are other factors that impact job search,” such as the Delta variant and low vaccination rates in some areas.

More people are expressing reluctance to return to work as COVID-19 rates rise. About 3.2 million people in early August said they were not working because they feared contracting or spreading COVID-19, a 30% increase from the end of July, according to Census data Office.

Including her unemployment assistance, Mohar earns about $ 1,100 every two weeks, more than what she earned as a graduate assistant, and she credits this financial assistance to help her and her partner to move out of substandard housing and pay their bills.

Even so, they had to spend the money they had spent on buying a house in order to stay afloat. She has just received a reminder for a job application and hopes to find a job before October. Mohar said, “It’s so hard every day to wake up and not know if you’re going to be able to pay your bills or what’s going to happen.”

The Associated Press contributed to this report.


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