More than 7 million Americans are set to fall off a “benefits cliff” as a September deadline looms for an end to federal pandemic unemployment aid programs, with dim prospects for an extension in light of surging demand for labor.
Created to help Americans weather the economic impact of the outbreak, the various programs are due to run out on Sept. 6. While progressive groups, along with some Democrats, have called for the programs to be extended, there is reluctance on both sides of the aisle on Capitol Hill for such a move, given the record-high number of job openings, layoffs being at a record low, and businesses reporting difficulties hiring workers.
Lawmakers in March 2020 established three new programs with the passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act: Pandemic Unemployment Assistance (PUA), covering workers typically ineligible for regular state unemployment insurance benefits, including freelancers and gig workers; Pandemic Emergency Unemployment Compensation (PEUC), providing additional coverage beyond the regular 26 weeks most states provide; and Federal Pandemic Unemployment Compensation (FPUC)—the $300 weekly boost over and above state benefits.
Nearly 9 million Americans were receiving benefits under two of the programs as of July 24, according to a Labor Department report (pdf)—4.82 million through PUA and 3.85 million via PEUC.
The Century Foundation, a left-leaning think tank, estimates that when all the programs expire, 7.5 million people will be cut off, potentially leaving many in the lurch at a moment when the spread of the Delta variant of the virus that causes COVID-19 threatens the economic recovery.
“Cutting off benefits by Labor Day will leave 7.5 million workers without critical assistance they need to keep themselves financially stable until they can find a new job,” Andrew Stettner, a senior fellow at the Century Foundation, wrote in an analysis. “Imposing such deep hardship on families and the economy, is an unforced economic policy error that can and should be avoided.”
Yet, in the face of a record 10.1 million job openings in June and businesses reporting hiring difficulties, lawmakers on both sides of the aisle have expressed reluctance to extend the programs.
President Joe Biden said in July that it would “make sense” for the programs to lapse in line with their scheduled expiry date, while Sen. Joe Manchin (D-W.Va.) told Business Insider last week, “I’m done with extensions.”
“The economy is stronger now, the job market is stronger. Nine million jobs we can’t fill. We’re coming back,” Manchin said. His opposition would make it impossible for Democrats to pass an extension through reconciliation in the evenly split Senate, let alone through the regular legislative process.
Republicans, who have blamed generous unemployment benefits for sidelining workers at a time when businesses are on a hiring spree, are expected to universally oppose any renewal proposals put forward in Congress.
Sen. Lindsey Graham (R-S.C.) in June urged the Biden administration to cancel the federal pandemic aid programs ahead of schedule, telling the acting White House budget chief that the programs were creating disincentives for people to take jobs.
“There’s a lot of jobs out there that are unfilled and will never be filled until you change the benefit structure,” Graham said.
“Bottom line is I think there are people out there, they’re not bad people, but they’re not going to work for $15 an hour and make $23 unemployed.”
In a bid to encourage the unemployed to get back on payrolls, dozens of mostly Republican-led states have ended their participation in some, or all, of the programs ahead of their scheduled expiry date.
Some Democrats have expressed support for extending the programs, with Sen. Ron Wyden (D-Ore.) telling Business Insider that they’re “going to put out all the stops” in getting them renewed.
“During the summer break, I believe senators are going to hear from these gig workers,” Wyden told the outlet. “Folks, for example, who are really hurting and just not getting significant numbers of economic opportunities in this economy.”
While Biden hasn’t endorsed any extensions, White House press secretary Jen Psaki left open that possibility. She was asked at an Aug. 6 briefing whether there had been a shift in the president’s thinking on the matter, given the spread of the Delta variant and fears that it could dampen the economic recovery.
“He’s still deciding whether to ask to renew them—whether to seek to renew them or not?” a reporter asked.
“Correct,” Psaki replied. “At this point, they’re expiring at the beginning of September. Nothing has changed on that front, but a final decision has not been made.”