Categories
benefits Unemployment

$600 Unemployment Benefits Are About To End, Hitting Households And The Economy : Coronavirus Live Updates – NPR

Treasury Secretary Steven Mnuchin has suggested that if federal jobless benefits are extended, it will be in a different form than the flat $600 per week.

Erin Scott/Pool/Getty Images


hide caption

toggle caption

Erin Scott/Pool/Getty Images

Treasury Secretary Steven Mnuchin has suggested that if federal jobless benefits are extended, it will be in a different form than the flat $600 per week.

Erin Scott/Pool/Getty Images

For Lorena Schneehagen, the additional $600 unemployment payment each week during the coronavirus pandemic has held her family’s expenses together.

She’s an out-of-work preschool teacher in Ann Arbor, Mich., whose son is about to start college.

“I need that to help pay his tuition,” Schneehagen said. “And for food and just to pay the general bills.”

Tens of millions of Americans who lost their jobs because of the pandemic are now in danger of having their incomes slashed for a second time. The supplemental unemployment benefits of $600 per week that Congress approved four months ago are set to expire at the end of this week in most states — threatening to hurt strapped households and the U.S. economy, as billions of dollars’ worth in spending suddenly comes to a halt.

Lawmakers Are Far Apart On A New Coronavirus Relief Bill. Here Are 5 Sticking Points

Economist: U.S. Workers, Economy Will Suffer With End Of Federal Pandemic Benefits

As Congress comes back into session this week, lawmakers will debate whether to extend the supplemental benefits, which have been a lifeline for more than 30 million people across the United States.

“The extra $600 from the government has obviously helped me tremendously,” said bartender Courtney Woodruff, who lost her job at a Denver brewpub. “I don’t really spend a lot. My money is going towards rent and food right now.”

While ordinary unemployment benefits usually cover just a fraction of a worker’s lost wages, the additional $600 per week from the federal government was designed to fully replace the average worker’s missing paycheck.

'We Need Help': People At Higher Coronavirus Risk Fear Losing Federal Unemployment

“Honestly, that’s made it a lot less stressful to not have to be forced to go out and be in public with the virus,” said Stephen Pingle, who was laid off from his job installing Internet cable and security cameras in Nashville, Tenn.

Pingle has stopped spending on what he calls “frivolous” items and has tried to save as much as he can. He knows the supplemental benefits may run out soon.

“I’m trying not to worry too much about it,” he said. “But it’s hard to keep pushing it off, knowing that there’s potentially that massive of a financial hit coming.”

Money Is Flowing For Big Banks. For Unemployed Americans, It's About To Be Cut Off

If the hit comes, it will be felt not only by the unemployed but by grocers, landlords and the broader economy. Cutting off benefits to so many people at once would reduce their collective spending power by nearly $19 billion per week.

“However you slice these numbers, we’re talking about very large amounts that mean quite a bit to workers and to the macroeconomy,” said Ryan Nunn, who leads applied research at the Federal Reserve Bank of Minneapolis.

In an interview last week, Nunn said the extra jobless benefits have acted as an important crutch for the economy. Without them, the U.S. would likely have experienced more defaults on car loans and credit card bills and more people falling behind on their rent. That’s one reason congressional Democrats argue that the government should keep the $600-a-week payments flowing.

'Devastated': As Layoffs Keep Coming, Hopes Fade That Jobs Will Return Quickly

“We’re never going to have our economy come back unless we recognize that we must put money in the pockets of the American people,” House Speaker Nancy Pelosi, D-Calif., told reporters.

Some employers have complained that the generous jobless benefits make it hard for them to attract workers. Nunn said while ordinarily that would be a concern, there’s little danger of a worker shortage when unemployment is in the double digits and the virus itself is forcing new limits on economic activity.

Still, it’s a complaint that the Trump administration takes seriously.

“I’ve heard stories of where companies are trying to get people back to work and they won’t come because of the enhanced unemployment,” Treasury Secretary Steven Mnuchin told CNBC. He suggested that if federal jobless benefits are extended, it will be in a different form than the flat $600 per week.

Millions Of Americans Skip Payments As Tidal Wave Of Defaults And Evictions Looms

“We’ll fix that, and we’ll figure out an extension to it that works for companies and works for those people that will still be unemployed,” Mnuchin said.

Schneehagen, the Michigan preschool teacher, doesn’t expect to be called back to her old job anytime soon. Although the school has reopened, enrollment is down. Teachers who are working have had their hours cut, and the school is having to cut costs even on things like air conditioning during an unseasonably hot summer.

Schneehagen has started to explore alternative work as a nanny.

“I really think there’s going to be a crunch for jobs pretty soon,” she said. “There aren’t that many jobs out there. And there are going to be so many people looking in the next couple of weeks.”

Read More

Categories
benefits Unemployment

This is the last week of $600 unemployment benefits – CNN

(CNN)The end is near for the $600 federal lifeline for millions of unemployed Americans — even though the economy is still far from recovered from the coronavirus pandemic and new layoffs are being announced regularly.

The coronavirus relief program technically doesn’t expire until July 31, but this coming week will be the last for which benefits are paid — because payments are only provided for weeks ending on either Saturday or Sunday.
Jobless Americans will still get state unemployment benefits, but the sunset of the Congress’ $600 enhancement — part of the $2 trillion economic aid package passed in March — will leave more than 25 million people thousands of dollars poorer each month. And it will expose more of the real pain of mass unemployment, just as many states are reimposing shutdowns.
“These emergency unemployment benefits have been propping up families and propping up the economy now for several months, said Kali Grant, senior policy analyst at the Georgetown Center on Poverty & Inequality. “Ending the benefits prematurely will really set back any economic recovery that may have been on the way.”
Congressional lawmakers are beginning to work this week on the next economic stimulus package. But it’s unlikely they’ll agree on — much less approve — the next step to help unemployed Americans before the payments lapse.
The provision was controversial from the start, mainly because the $600 boost, when added to state benefits, is more than what two-thirds of workers made on the job, according to an estimate from University of Chicago researchers.
But lawmakers approved it in late March as part of a historic expansion of the nation’s unemployment program at a time when health officials didn’t want people out looking for work. The flat $600 payment was much easier for state agencies — which were already struggling as a flood of claims overwhelmed their antiquated technology — to implement.
Congress approved the boost for only four months, thinking that the economy would bounce back quickly once the coronavirus was vanquished and businesses reopened. For a while, that seemed to be the case — with employers hiring more than 7 million workers in May and June after shedding an unprecedented 20.5 million jobs in April.
Senate Republicans, who are expected to release their proposal this week, are generally loath to extend the full benefit. They feel it creates a disincentive for people to return to work, a concern echoed by some business owners. Instead, GOP lawmakers are considering scaling back the enhancement by several hundred dollars and creating a bonus for those who go back to work.
Democrats, on the other hand, want to continue the bigger benefit into 2021. The House included that provision in the $3 trillion coronavirus relief bill it passed in May.
“The right thing to do for families and the economy is extend supercharged unemployment benefits,” said Oregon Sen. Ron Wyden, a Democrat. “They have unquestionably kept the economy afloat.”

Blunting the impact

The augmented benefit has blunted the impact of the coronavirus-induced economic upheaval, which prompted the sharpest and swiftest loss of jobs on record in April. Still, 4.3 million homeowners missed their mortgage payments in May, the highest level since 2011, according to Black Knight, a mortgage data company.
And, the vast majority of food banks were still seeing a big jump in demand in early July, compared to a year ago, with 50% more people being served, on average, according to Feeding America, a network of food banks. Just under 30% were new clients.
The $600 payment provides more than $15 billion a week to 25 million Americans, according to an analysis by Andrew Stettner, senior fellow at The Century Foundation. Many are using it to cover their rent or mortgage, buy food and spend on other basic needs.
Shanga McNair of Jacksonville, Florida, is one of them. The veteran bartender lost her job at a brewhouse when the state shut down earlier this spring and then returned to work in early June at a jazz bar for about two shifts a week — down from her typical six. However, state officials closed the bars again in late June after coronavirus cases spiked, sending her back to unemployment. Her side jobs bartending at private parties and banquets have also dried up.
The $600 federal boost, on top of her $275 weekly state benefit, is less than she made while working. It barely pays her rent but has allowed her to keep up with her bills. The 40-year-old, who also visits a local food pantry occasionally to supplement her grocery shopping, figures that if Congress doesn’t extend the enhancement, she has three months to find a job before she’s evicted.
So far, she’s had no luck. McNair has sent scores of applications to restaurants, warehouses, customer service firms and offices, but they have yielded nothing. She even filled out an application while grabbing a bite at Popeye’s after seeing the manager working multiple jobs but was told there was a hiring freeze.
“I hate depending on the government, but everything is out of my control,” said McNair, who is putting two daughters through college and has never collected unemployment before. She has written to her elected representatives in both parties. “You can’t just pull the rug because it’s not over.”
Eliminating the federal benefit will reduce workers’ weekly unemployment payments by 50% to 85%, depending on their state, Stettner said.
As Congress debates what to do, more people are at risk of losing their jobs in fresh rounds of layoffs. United and American airlines have warned this month that tens of thousands of employees could be cut or furloughed this fall. JCPenney announced last week that it would cut 1,000 jobs from its executive and regional offices. Other retailers, including Brooks Brothers and Neiman Marcus, have filed for bankruptcy.
Also, the spike in coronavirus cases has prompted at least two dozen states to halt or reverse their reopening plans, which will also cost people their jobs. For instance, California last week ordered the shuttering of bars, movie theaters and indoor dining at restaurants statewide, as well as the closing of gyms, houses of worship, indoor malls, hair salons and some offices in many counties.
The impact is already showing up in the data. The states with the largest surge in coronavirus cases earlier this month also had the biggest increase in initial unemployment claims, according to William Rodgers III, chief economist at the Heldrich Center for Workforce Development at Rutgers University.
Some economists fear that the nascent jobs recovery will be derailed, sending even more people onto the unemployment rolls.
“Conditions in the labor market remain weak and the risk of mounting permanent job losses is high, especially if activity continues to be disrupted by repeated virus-related shutdowns,” said Rubeela Farooqi, chief US economist at High Frequency Economics.

Read More