Disaster Looms: As Republicans Abandon America’s Unemployed, Millions Face Total Loss Of Income
No matter what happens next week, tens of millions of Americans will remain unemployed as the cold season threatens the country with new spikes of coronavirus cases. Already beset by the loss of enhanced unemployment benefits which Senate Republicans allowed to expire in July, over ten million workers face a total loss of income when CARES Act unemployment programs expire if they are not renewed by the end of the year. The Senate adjourned on Monday with no plans to resume work until mid-November, and Senate Republicans remain opposed to a new assistance package to provide relief to American families.
“Republicans’ failure to reauthorize unemployment supports is a catastrophic mistake that threatens to engulf the personal finances of millions of families,” said Rep. Don Beyer, Vice Chair of Congress’ Joint Economic Committee. “Unfortunately, this problem will be compounded by Republican opposition to new economic assistance, which has resulted – as we warned it would – in a stalled recovery. The economic calamity threatening American households is largely self-inflicted, and will get even more dire unless Congress takes bipartisan action soon. We are no longer talking about stimulus, we are talking about life-preservers for millions people who have been terribly hurt and face worse personal tragedy.”
In the wake of the economic collapse caused by the pandemic, Congress enacted a series of expansions of existing unemployment programs (see the excellent flowchart created by the Congressional Research Service here). Availability of benefits varies by state based on state law and economic conditions, but key programs set up by Congress expire at the end of the year. If they are allowed to expire, millions of workers in certain jobless benefit situations would be completely cut off and face a total loss of income.
The list of expiring programs includes Pandemic Unemployment Assistance (PUA), which currently has over 10 million recipients. Millions more currently receiving Pandemic Emergency Unemployment Compensation (PEUC), which also is set to expire at the year’s end, would largely be shifted to Extended Benefits in states where they remain triggered on (explainer here). However, the cost-sharing agreement with the federal government for that program will expire, potentially overwhelming state unemployment insurance trust funds with new unemployment recipients. Extended Benefits have significantly shorter duration than regular state unemployment insurance.
Enhanced federal benefits passed in the CARES Act achieved significant levels of wage replacement and averted a larger collapse of aggregate demand. In the months since Senate Republicans allowed those benefits to expire, long term unemployment has grown significantly and many have already exhausted regular state benefits. Job growth has stalled, but the bottom has not fallen out of the economy – yet – largely thanks to widespread increased savings by American households which helped sustain spending after unemployment benefits fell off. President Trump’s cut-in-half unemployment benefit was insufficient to the scope of need and ran out quickly without ever reaching many unemployed workers.
Though the President claims our “economy is doing great,” the reality is far worse than many realize. Historically high unemployment continues with regular announcements of mass layoffs, and millions of small businesses report they are on the edge of failure. In the wake of massive job losses millions have already lost health insurance, and many millions more are at risk of losing coverage. The economic damage caused by the pandemic has been uneven across different groups of American workers, hitting people of color especially hard and causing millions of women to leave the labor force entirely. As long-term unemployment spikes, eight million Americans have fallen into poverty in recent months, and many are simply running out of money. Half of the nation’s unemployed were unable to cover basic expenses in August and over 34 million found doing so “very difficult.” Growing numbers risk losing power and water and 40 million Americans are at risk of eviction, threatening a ‘homelessness pandemic’ as temporary moratoria expire. The nation is experiencing simultaneous mental health and child care crises, and millions are just going hungry.