An estimated 7.5 million workers lost benefits on September 6, 2021—the largest cutoff of unemployment payments in history, many times larger than any previous cessation of disbursements, such as the 1.3 million Americans whose support ended in 2013 or the 800,000 in 2003.
Although Gov. Phil Murphy has the authority to extend the payments using part of the $10 billion in federal funds allocated to New Jersey for Covid relief, the Wall Street multimillionaire refused to do that and will apply those funds to other priorities.
Local officials who want to extend enhanced unemployment benefits can do so, the White House said on Tuesday, a day after the administration and U.S. Congress allowed a program to lapse which had boosted payments during the COVID-19 pandemic.
Programs providing up to $300 extra a week to millions of people who lost their jobs during the pandemic ended on Monday as the U.S. celebrated Labor Day.
“Without this money, New Jersey’s economy will lose $265 million per week just ahead of the holiday shopping season, so not only will 500,000 unemployed workers lose income but all the subsequent revenue recipients will lose out as well because money from one person to the next,” said Lisa McCormick, a progressive Murphy critic.
Benefits were also available for people who normally do not qualify for state unemployment money, with checks going to those without jobs for an extended period of time and to “gig workers” who perform on-demand services, including as drivers, delivering groceries or providing childcare. Those people will be cut off entirely.
White House press secretary Jen Psaki said there are other options available for states to extend benefits to people in need.
The COVID-19 pandemic unleashed an unprecedented wave of unemployment impacting a wide variety of Americans, from those who lost jobs when small retail businesses closed in the wake of necessary restrictions to caregivers forced to quit work when their children’s school switched to virtual learning.
Starting with the CARES Act, the U.S. government took some bold policy actions so that workers impacted by this epochal pandemic would not suffer long-term economic damage amid spending that greatly favored the rich.
In particular, regarding unemployment insurance, the federal government initiated three major programs:
- Pandemic Unemployment Assistance (PUA), which allows traditionally ineligible workers (including gig workers) and others who lost work due to COVID-19 to receive aid.
- Federal Pandemic Unemployment Compensation (FPUC), which provided $600 per week at first, and later $300 per week, to supplement the meager unemployment benefits amount provided by states—$334 per week on average—when the pandemic-induced jobs crisis erupted in spring 2020.
- Pandemic Extended Unemployment Compensation (PEUC), which grants additional weeks of benefits to those who are still jobless when they exhaust their state benefits (which typically last twenty-six weeks).
Congress supported several other critical programs, including Mixed Earners Unemployment Compensation ($100 per week extra for those workers whose labor was split between being an employee and being an independent contractor), and 100 percent federal funding for expansion of the existing Federal–State Extended Benefits (EB) program (an extra thirteen to twenty weeks of benefits in high unemployment states) and for work-sharing benefits (partial benefits for those workers who were kept on part-time by their employer).
Passed in the middle of March, the American Rescue Plan Act (ARPA) continued all of these critical programs.
- The maximum duration of PEUC benefits have been increased from twenty-four to fifty-three weeks.
- The maximum duration of PUA benefits were increased from fifty to seventy-nine weeks. Those in high unemployment states could receive up to eighty-six weeks of benefits.
- The $300 in additional FPUC benefits to all of those on unemployment also remained in place.
Taken together, these programs have delivered nearly $800 billion in assistance to families over the course of the pandemic. But this aid will soon abruptly come to an end.
Under current legislation, FPUC, PEUC, and PUA benefits could be paid through the week ending September 5, 2021, but after that, all of this federal assistance will be cut off on September 6, with no grace period.
Furthermore, in an unprecedented turn of events, twenty-six states ended these 100 percent federally paid benefits early.
“The message to these individuals is we’re going to continue to have your back,” she said.
The funding for extra jobless benefits had been provided as an economic stimulus measure in a series of bills following the COVID-19 pandemic, including the $1.9 trillion American Rescue Plan passed in March by Biden and his fellow Democrats. The administration never pushed for a nationwide extension.
Psaki said the White House would “continue to work with states where you’re living to help them implement programs, including the distribution of the American Rescue Plan funding, so that you can get the assistance you need.”
Republicans opposed the benefits, saying they would discourage work at a time when a record 10.1 million job openings were available, as of the end of June. Many governors cut off the extra payments in their states.
In the face of the Delta COVID-19 variant, which threatens to keep some workplaces closed, there’s a need to extend current benefits and permanently fix the unemployment programs so temporary extensions are not needed.
This controversial move—already ruled to be in violation of state law in three states (Arkansas, Indiana, and Maryland) and subject to ongoing litigation in other states—has somewhat distracted the nation’s attention from the far larger impact of the looming benefits cliff coming in September, which will affect all states, including the nation’s largest, where the pandemic has had the most sizable impact on the labor market.
With the U.S. economy still short 6.5 million jobs as of the end of June 2021, the end of the pandemic unemployment benefits will be an abrupt jolt to millions of Americans who won’t find a job in time for this arbitrary end to assistance.
The U.S. economy is recovering from the deep wound of the pandemic jobs crisis, but millions of workers are still unemployed. Furthermore the impact of the jobs crisis has hit American workers unevenly, with some social and geographic sectors hit harder than others.
Because unemployment benefit levels vary greatly from state to state, the ending of federal benefits will have a far greater impact where traditional state benefit levels are the lowest.
As of the week of July 10, there were a total of 9.3 million Americans relying on one of the two main pandemic unemployment programs (5.1 million on PUA and 4.1 million on PEUC).
As the recovery has moved forward, this total has declined steeply from 13.8 million at the end of February, and that decline is predicted to continue through the rest of the summer.
Based on rates of reemployment and when workers entered the program, our model predicts that there will be 7.5 million workers on these two programs when they come to an end. This includes:
- 4.2 million workers on the PUA program. By definition, these workers are not eligible for any form of federal and state unemployment compensation, including many self-employed individuals and gig workers—and thus will be out of options once the PUA program ends. The largest group is in California (more than 1 million workers), but there are more than 150,000 individuals impacted as well in the states of Indiana, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, and Pennsylvania.
- 3.3 million workers who would lose benefits being provided through the PEUC program. California is again the largest impacted (900,000), but the states of Florida, Illinois, Massachusetts, Michigan, New Jersey, New York, and Pennsylvania also each have 125,000 workers subject to an abrupt loss of benefits.
Throughout the pandemic, workers exhausting PEUC benefits have been eligible for the Federal–State Extended Benefit program, which provides an additional thirteen to twenty weeks of benefits, but this program will be largely out of reach for jobless workers after September 6, 2021. While there are ten high-unemployment states currently eligible for this program, six of those ten states are participating only on the condition of receiving 100 percent federal funding. As of September 6, we predict that only Alaska, Connecticut, New Jersey, and New Mexico will be able to transition exhausting PEUC recipients onto EB, but with 50 percent state funding. Even in these states, not all workers exhausting PEUC in September will be able to go on to EB because some on PEUC now have already received EB earlier in the pandemic.
Some workers who were on PEUC are able to go back on traditional state unemployment benefits, but at a lower rate than before, if they have worked intermittently since they were first laid off in 2020.