Stress rises for unemployed as extra $600 benefit nears end
WASHINGTON — A major source of income for roughly 30 million unemployed people is set to end, threatening their ability to meet rent and pay bills and potentially undercutting the fragile economic recovery.
In March, Congress approved an extra $600 in weekly unemployment benefits as part of its $2 trillion relief package aimed at offsetting the impact of the coronavirus pandemic. That additional payment expires next week unless it gets renewed.
For Henry Montalvo, who was furloughed from his job as a banquet server and bartender in Phoenix in mid-March, the expiration of the $600 will cut his unemployment benefits by two-thirds. He uses the money to help support his three children and pregnant girlfriend.
“Now that it’s about to end, that grim and uneasy feeling is coming back and really fast,” Montalvo said.
The unemployment insurance program has emerged as a crucial source of support at a time when the jobless rate is at Depression-era levels. In May, unemployment benefits made up 6% of all U.S. income, ahead of even Social Security, and up dramatically from February, when it amounted to just 0.1% of national income.
“The increase has likely done as much or more to limit widespread hardship like food insecurity, homelessness, utility cutoffs, and mental health challenges, as any provision Congress has enacted in response to the pandemic and recession,“said Indivar DuttaGupta, co-executive director of the Georgetown Center on Poverty & Inequality.
Congress enacted the extra payment for just four months, largely on the assumption that the viral outbreak would subside by late July and the economy would be well on the way to recovery. But confirmed case counts are rising in 40 states and 22 states are either reversing or pausing their reopening efforts, threatening to slow rehiring. The number of people seeking weekly jobless aid has leveled off at roughly 1.3 million, after falling steadily in May and early June.
Eliminating the extra payment would cut benefits for most recipients by 50% to 75%, depending on the size of each state’s unemployment benefit, which varies based on a worker’s prior income. Arizona’s maximum payment of $240 is near the low end, while Massachusetts is among the most generous, with a weekly maximum payment of more than $800.
Other measures intended to shore up business and household finances, such as one-time payments of $1,200 and a small business lending program, have also largely run their course. That could sharpen the impact of the pandemic-induced job losses, which have pushed the unemployment rate to 11.1%.
Another government rescue package is in the works and some sort of extended extra benefit is possible.
The extra $600 was initially agreed upon because, for an average worker, it made their jobless benefits equal to their previous pay. Most states’ antiquated unemployment systems weren’t able to calculate a percentage increase in benefits that would have accomplished that for laid-off workers at different income levels.
Layoffs since the pandemic struck have been heavily concentrated in low-paying service industries such as restaurants, bars, and retailers, where workers make below-average incomes. That has made the $600 a boon to such workers, who are disproportionately Black and Latino. The Congressional Budget Office estimates that 42% of the people getting the extra $600 are nonwhite.
Many state limits on evictions will expire by this fall, raising the risk that more unemployed could become homeless. Congress suspended evictions from public housing in late March but only until Saturday. The COVID-19 Eviction Defense Project estimates that 19 million to 23 million people could be thrown out of their apartments by the end of September.