Unless Congress Acts, 20 Million People Will Lose Unemployment Aid in Just 41 Days: Analysis

A new analysis out Tuesday estimates that 20 million people across the U.S. will lose unemployment benefits if emergency federal programs are allowed to lapse at the beginning of September--and there's little indication that Congress plans to stave off such an outcome.

"There's no reason to throw tens of millions off an economic cliff."
--James Myall, Maine Center for Economic Policy

Citing the latest data from the U.S. Census Bureau's Household Pulse Survey, Matt Bruenig of the People's Policy Project (PPP) wrote that around 10 million people in the U.S. will lose jobless aid entirely on September 6, the official expiration date of federal programs designed to extend unemployment insurance (UI) to gig workers and prolong the duration of benefits amid the coronavirus pandemic.

Another 10 million people, Bruenig noted, will see their benefits slashed by $300 per week if Congress allows the Federal Pandemic Unemployment Compensation (FPUC) program to expire.

"Needless to say, the Democrats should do whatever it takes to prevent such a catastrophe from occurring while also taking steps to restore unemployment benefits to individuals who have already seen them prematurely cut off," Bruenig argued, referring to the 26 states that have prematurely cut off the federal unemployment programs.

"In practical terms," he continued, "this means that the Democrats need to include further UI extensions in the next reconciliation bill while also ensuring that the federal government will step in and directly administer UI for the residents of any state where the governor refuses to play ball."

Sen. Bernie Sanders (I-Vt.), the National Employment Law Project, and other worker advocates have argued that the Biden administration is required by law to keep providing emergency federal UI to all eligible recipients through September 6, regardless of states' actions.

But the Biden administration has thus far declined to intervene and continue distributing benefits in states that have cut them off early, leaving workers to take matters into their own hands.

Bruenig's analysis comes amid growing evidence that the early termination of federal unemployment benefits in 25 Republican-led states and Louisiana has caused significant harm to jobless workers while doing little to boost hiring--a blow to the GOP narrative that unemployment assistance is dissuading people from returning to the job market.

"So far, early data suggests that cutting the benefits given to Americans who lost their jobs during the Covid-19 pandemic has not led to a big pickup in hiring," the Washington Post reported Tuesday, citing Labor Department statistics. "The 20 states that reduced benefits in June had the same pace of hiring as the mostly Democrat-led states that kept the extra $300-a-week unemployment payments in place."

Initial unemployment claims unexpectedly ticked up across the nation in the week ending July 17, leading experts to warn that the U.S. economy is nowhere near fully recovered from the pandemic-induced recession.

"The end of federal pandemic UI aid has the potential to take the wind out of the sails of our economic recovery," Andrew Stettner, a senior fellow at the Century Foundation, said last week, alluding to the positive impact the federal unemployment programs have had on consumer spending.

"And, if recent data holds up," Stetter added, "the end of benefits won't lead to a dramatic increase in employment."

While Congress has extended the emergency federal unemployment programs several times throughout the pandemic, the Post's Jeff Stein noted Tuesday that "there is essentially zero talk on Capitol Hill" of extending them again in either a forthcoming bipartisan infrastructure package or Democrats' sweeping reconciliation bill, despite evidence that the nation is in the midst of a fourth wave of coronavirus infections.

"Congress should be paying much more attention to this," said James Myall, a policy analyst at the Maine Center for Economic Policy, referring to the looming expiration of federal UI benefits. "The labor market is getting stronger, but there's no reason to throw tens of millions off an economic cliff."