Unemployed imperiled as GOP resists $600 in aid
Jobless claims down a bit, but more living on the edge
Nearly 1.2 million Americans filed for unemployment benefits last week, the 20th consecutive week in which new filings topped a million as a pandemicbattered economy continued to struggle to find its footing.
Some of those newly jobless now face eviction and hunger, along with the threat of the coronavirus, which at once has drastically cut the jobs available and heightened the risk of the work that is offered.
Their economic woes may soon be shared with others. A $600aweek federal boost to state unemployment payments ran out in July. That money, which many unemployed spent on food, rent and other necessities, injected a stimulus into other businesses, and without their spending the economy faces further contraction.
Congress continues to disagree on a second rescue package, with Democrats and Repub
licans “trillions of dollars apart,” White House Chief of Staff Mark Meadows told reporters this week.
Department of Labor data show that 1.19 million Americans filed for unemployment insurance benefits in the week that ended Saturday, joining the 16.1 million on the rolls as of late July. A hopeful sign in the numbers is that it represents a 17% drop from the 1.4 million Americans who filed for unemployment two weeks ago and a reversal of a trend of rising filings that started in midJuly.
Some 238,530 Californians filed for unemployment benefits in the week that ended Aug. 1, a slight decrease from the previous week. The state has processed more than 9.7 million claims since the onset of the pandemic in midMarch, paying a total of $59.8 billion in benefits, according to the Employment Development Department.
California may seek to replace lost federal benefits for the unemployed if Congress fails to act to extend them, state lawmakers said in July. The plan proposed by state Democratic legislative leaders last week would fill any gaps in the $600aweek payments if Congress decides to continue them at a smaller amount, ultimately aiming to pump $100 billion in stimulus money into the state’s economy.
Negotiations continued on Capitol Hill on Thursday over the second rescue package with both sides still far apart. Republicans previously proposed cutting weekly payments to $200 while the Democratdominated House passed a bill in May that would extend the $600 payments into January. Republicans believe the payments are too generous and discourage the unemployed from seeking jobs, while Democrats argue that there are not enough jobs for the millions who might seek work.
The steady stream of filings may have been bolstered by businesses that attempted to open their doors only to be stymied by rising coronavirus cases, according to Michael Bernick, former head of California’s Employment Development Department and now a lawyer at Duane Morris in San Francisco.
“With the new lockdowns have come more business closures and layoffs,” Bernick said in an email. “Especially workers initially furloughed who are now being laid off.”
A recent report from UCLA found that more than half of claims filed in the secondtolast week of July were filed by workers who had found new jobs or gone back to work, only to have their hours cut or again lose their job as the reopening faltered statewide, forcing them to refile for benefits.
“The precariousness of this situation is I think difficult to exaggerate,” said David Wilcox, a former Federal Reserve Board economist now with the Peterson Institute for International Economics.
Wilcox said Congressional wrangling over whether to extend the expired benefits, and if so at what level, has left millions of Americans exposed to a range of problems from food insecurity to the inability to pay rent and utilities.
“The scale of the damage is proportional to the length of time it takes Congress to enact a replacement,” Wilcox said.
He was skeptical of efforts at the state level to replace the expiring federal benefits.
“The financing of those added benefits would be difficult for most states to undertake,” Wilcox said. “As a practical matter, the only realistic pathway here is to have the Congress return and enact some sort of a replacement for the $600 a week.”
Economic benefits from the more than $2 trillion pumped into the economy from the federal Cares Act at the outset of the pandemic are also running out, with consequences for businesses and jobs.
Many small businesses have all but burned through the money they received through the Paycheck Protection Program that allowed them to keep paying employees during shelterinplace orders, Wilcox said. Applications for that program end Saturday.
Eviction protections in the Cares Act have also expired and landlords in much of the country can begin to serve notices to renters who cannot pay.
Nicholas Javier had to give up his rentcontrolled apartment in his native San Francisco not long after he was laid off in March from his job as a server at the Oak Room restaurant at the Westin St. Francis hotel on Union Square.
Javier said he applied for unemployment a few weeks after the shock of losing his job, but that even with the expanded federal payments he couldn’t get by on unemployment in San Francisco.
“The $600 (per week) allowed me to be able to breathe,” said Javier, who has since moved in with his partner. “You take away that extra $600, and I don’t know if I’ll be able to breathe.”
Javier said he counts himself lucky that he still has health care through his union, Unite Here Local 2, but said that will expire in October.
“It’s also on a timer just like unemployment,“Javier said. “During this pandemic you would think it would be basic to have health care guaranteed.”
The ownership of the hotel did not respond to an emailed request for comment.
Javier said he has spent his time while out of work sending letters to Congress and working through his union in an effort “to organize and not agonize” over his difficult situation.
With increased benefits no longer flowing to unemployed people like Javier, spending could plummet further than it already has and further pummel a limping economy.
“It could be a shock to the economy,” said Chris Rupkey, chief financial economist at MUFG Union Bank, a subsidiary of the Japanese financial group. Rupkey said the expired federal benefits worked out to roughly $75 billion each month, most of which is being spent instead of saved as the unemployed scramble to cover the essentials.
Spending in the second quarter of the year had already dropped by 34%, Rupkey said, as restaurants, bars, shops and other businesses closed for fear of the virus.
He said while the payments represented a small portion of consumer spending, “you get a lot more bang for the buck in distributing dollars this way,” because many people are desperate and the money is quickly put back into circulation.
Rupkey said he believed “we’re over the hump with the job losses” but said cutting off the benefits now takes money out of people’s hands and could delay the recovery and cause additional unemployment.
That could mean further pain for unemployed people like Javier. He said his partner still works one of the two jobs she had before the pandemic, which helps them to “squeeze by.” To lose that as well would make surviving even harder.
Javier said the job market is difficult and he is worried about exposure to the virus if he finds a job in another essential position.
“My life is all still up in the air,” he said. “I don’t know when I’ll be able to reclaim my life.”