‘Even grocery shopping is pretty scary’
what happened to these workers’ finances in September. But the reality is probably grim. If the $600 checks created something of a life preserver for jobless workers — protecting them for a time from Washington’s political dysfunction — that life preserver deflated quickly, Ganong said.
“Perhaps it’s entirely deflated now,” he said.
Two and a half months after the benefits ended, Congress and the White House have been unable to reach an agreement on a broad stimulus package to revive them. President Donald Trump signaled this week that he wants a big deal, against the wishes of many Senate Republicans, but hopes have dimmed for an agreement before the election.
“It’s honestly kind of staggering to me that Congress could leave us in this position,” said Daniel Lawson, who has been without a job in New York City since early in the pandemic. He believes he caught the coronavirus while working at a Trader Joe’s in March and is still living with its effects: the fatigue, the brain fog, the sense of smell that hasn’t returned to normal yet.
He has to find a job he can do remotely because of his lingering health problems, he said. And to do any remote work, he had to replace a computer that stopped working this summer. That took a chunk of his savings. Now, without the extra federal payments, he’s receiving just $180 a week from the state of New York.
“Right now I’m in a position where I’m worried about being able to continue paying rent,” Lawson, 32, said. “I’m in a position right now where even grocery shopping is pretty scary.”
Faced with dwindling savings and constant bills, most households face a dilemma.
“The choices are to stop spending on regular everyday purchases, or stop making payments like mortgages, student loans, auto loans, credit cards,” Ganong said. “That’s a terrible choice for a family to have to make. It’s a terrible choice for the macro economy.”
The analysis found unemployed workers did cut their spending after the $600 supplement ended, but by a relatively small amount in August, on average about $57 a week. Ganong suspects that spending might have fallen much more rapidly in September, based on the dwindling savings workers had left.
The checking accounts used in the research, which were stripped of identifying information, come from Chase customers in 11 states where unemployment is paid out weekly, including California, New York and Wisconsin. In the data, workers receiving unemployment had those benefits deposited directly into their accounts. Workers who didn’t receive such payments were treated as still employed. And there’s little sign in account balances that the unemployed were moving large sums in or out of these accounts to other assets like savings accounts, making these checking accounts a good measure of the resources workers built up and drew down.
The unemployed workers in the research don’t include those who receive benefits by prepaid debit cards rather than direct deposits. Those workers, who may not have bank accounts at all, probably have lower incomes than the ones captured in this data, and they may have even fewer assets to draw on at this point.
Other research
Other research supports the idea that families have been saving a significant share of their unemployment insurance checks. In a survey fielded by the Federal Reserve Bank of New York in June, families reported setting aside nearly a quarter of their unemployment checks as savings. The New York Fed also found that nearly half of unemployment payments went toward paying down preexisting debt.
Even modest-seeming drops in spending by the unemployed reflect difficult decisions at this stage. Charissa Ward, who lost the well-paying job she’d had for 15 years as a server at Disney World in Florida, has replaced some grocery store runs with trips to a food bank. And the school supplies she would normally buy for her three children were donated by co-workers from Disney instead, when the $600 dried up on the eve of a new school year. “It’s a mental strain on people emotionally, especially for someone like me that has worked since I was 15,” said Ward, who is 37. “I’ve never been in this situation.”