Expanded unemployment insurance is scheduled to expire later this month — a development that could have dire consequences for millions of workers who still don’t have jobs to go back to.
“I am still furloughed and if the Senate does not extend the expanded weekly amount, I won’t be able to pay my rent or bills,” says Amy Muller, a teacher based in California, who’s been receiving unemployment insurance since this spring.
Republicans in Congress have argued that enhanced unemployment insurance (UI) deters people from going back to work. But as Muller’s situation illustrates, many don’t have jobs they can return to at this point.
“If you cut off the $600 to incentivize people to go back to work, that will just be cruel, because for millions of people the jobs aren’t there,” says Heidi Shierholz, the former chief economist at the Department of Labor and current director of policy at the Economic Policy Institute.
First approved in the CARES Act, the recent boost to UI adds an extra $600 per week to benefits that a worker receives. That expansion is significant: Exact benefits vary by state, but the average weekly amount prior to this addition was $370. With the legislation’s boost, that figure increases to $970 per week.
Experts say the UI expansion has been central to keeping the country’s economy afloat as the US continues to deal with the fallout from Covid-19: The benefits are intended to help workers stay safe and remain home as policymakers address the public health crisis.
Additionally, UI has served as a critical safety net for millions of workers whose jobs have effectively been eliminated in the near term. According to an analysis by the Economic Policy Institute, as many as 11.9 million workers have zero chance of returning to their prior jobs as temporary job losses become permanent ones.
Whether Congress will extend the expanded UI remains an open question. Lawmakers returned to the Capitol this week and have until late July to take action before the program is due to sunset. Democrats sought to continue the expanded program through January 2021 in the Heroes Act, while Republicans have countered with “return-to-work” bonuses and even an ad campaign that argued people without work should “find something new.”
The GOP approach, however, ignores a dismal reality. With small businesses continuing to shutter, new job postings slowing to a halt, and companies issuing fresh rounds of layoffs, unemployed workers are left with few options to pursue.
In Muller’s case, she’s been waiting to see if her job will come back, and applying to other openings in the meantime. “I have applied to every [art] teaching position that has posted in California,” she told Vox. “Not one has followed up as of yet.”
Job losses outweigh gains at the moment
In recent months, the number of people who are unemployed has far surpassed the number of new jobs that have been added to the economy.
According to the June jobs report from the Bureau of Labor Statistics, while 4.8 million new jobs were added that month, at least 17.8 million people remained unemployed. A weekly report on jobless claims also notes that as many as 33 million people were receiving state and federal UI benefits as of late June.
These figures indicate that the number of new job openings isn’t near comparable with the number of people who have filed for unemployment in recent weeks. A June working paper from researchers Jose Maria Barrero, Nick Bloom, and Steven Davis put it a different way: For every three new jobs, there have been 10 layoffs, they concluded.
Certain fields have dialed up hiring during the pandemic, Barrero, Bloom, and Davis point out: E-commerce giants including Amazon, delivery services like Instacart, and online education tools like Outschool have all sought to bring on more workers while other industries continue to contract.
The issue is that the number of jobs these industries are adding does not come close to making up for the number of jobs that have been lost. Additionally, many of the new jobs that are emerging are not in line with the experiences or fields that people may have been working in prior to the pandemic.
Jose, a Texas-based architect who was laid off this spring, for example, has been networking extensively but turning up little in the way of work in his field. “I’m on LinkedIn Premium, Indeed, CareerBuilder, you name it, looking for jobs, but I always get the same response,” he told Vox. “A few firms are interviewing ... but with no real intention of hiring in the near future.”
He notes that he’s started a programming course, in case that could help him with job opportunities down the line.
Experts emphasize that many of the job losses that have taken place this year could well be recovered once the economy fully bounces back from the pandemic, though some industries — like brick-and-mortar retail — could see more permanent effects. In the short term, the industries that have been forced to shutter or reduce their operations to promote safe practices during the pandemic — including restaurants, gyms, and hair salons — are among those that won’t see many jobs coming back any time soon.
“[There are] industries that we can assume will be really, really suppressed until we have a vaccine or effective treatment,” says Shierholz.
The UI expansion offers workers a safety net and boosts consumer spending
In addition to providing workers with vital support while the job market remains in flux, the UI expansion has also played an important role in maintaining consumer spending and supporting other jobs.
“Our estimates suggest that expiration will result in large spending cuts, with potentially negative effects on both households and macroeconomic activity,” researchers at JP Morgan Chase concluded in a July analysis, which examined the fallout that would result from an end to the expanded UI. These cuts could be devastating for the economy, Shierholz notes — affecting as many as 5 million other jobs.
“When ... that $600 goes away, so [millions of workers] will not be able to buy goods and services, those workers who were producing those goods and services, those workers lose their jobs,” she says.
Without the expanded UI, many workers will also face increasing challenges when it comes to basic living costs including rent and mortgage payments, as well as food. “The extension is a necessity for myself and others who have been affected by this pandemic,” says Nick Parisi, an IT worker in Michigan, who was laid off earlier this year.
For now, Congress is still at an impasse on what UI policy would look like in the next stimulus package, with Republicans intent on including incentives that will motivate people to return to work. That approach, however, continues to overlook a fundamental reality of the current economic crisis.