Not Just Cruel, GOP Blocking Unemployment Aid Is Terrible Economics

More than 1.0 million people applied for unemployment insurance (UI) benefits again last week, including 709,000 people who applied for regular state UI and 298,000 who applied for Pandemic Unemployment Assistance (PUA). PUA is the federal program that provides up to 39 weeks of benefits for workers who are not eligible for regular unemployment insurance, like the self-employed. Without congressional action, PUA will expire on December 26th (more on that below).

The 1.0 million who applied for UI last week was a decline of 112,000 from the prior week’s figures. Last week was the 34th straight week total initial claims were far greater than the worst week of the Great Recession. (If that comparison is restricted to regular state claims—because we didn’t have PUA in the Great Recession—initial claims last week were still more than 3.0 times where they were a year ago.)

Most states provide 26 weeks of regular benefits, but this crisis has gone on much longer than that. That means many workers are exhausting their regular state UI benefits. In the most recent data, continuing claims for regular state UI dropped by 436,000, from 7.2 million to 6.8 million.

For now, after an individual exhausts regular state benefits, they can move onto Pandemic Emergency Unemployment Compensation (PEUC), which is an additional 13 weeks of regular state UI. However, like PUA, PEUC is set to expire on December 26th (more on that below).

In the latest data available for PEUC, (the week ending October 24) PEUC rose by 160,000, from 3.98 million to 4.14 million, offsetting only about a quarter of the 598,000 decline in continuing claims for regular state benefits for the same week. The small increase in PEUC relative to the decline in continuing claims for regular state UI is likely due in part to administrative delays workers are facing getting on to PEUC. Further, many of the roughly 2 million workers who were on UI before the recession began, or who are in states with less than the standard 26 weeks of regular state benefits, are exhausting PEUC benefits. More than a million workers have exhausted PEUC so far (see column C43 in form ETA 5159 for PEUC here). Last week, more than half a million (552,000) workers were on Extended Benefits (EB) which is a program that unemployed workers can get on in some states if they’ve exhausted both regular state benefits and PEUC. But workers will soon begin to exhaust EB in large numbers, as well.

Figure A shows continuing claims in all programs over time (the latest data are for October 24). Continuing claims are nearly 20 million above where they were a year ago. However, use caution interpreting trends over time since March because of reporting issues.

And blocking more COVID relief is not just cruel, it’s terrible economics. For example, the spending made possible by the extra $600 in UI was supporting millions of jobs. Letting the $600 expire means cutting those jobs. Not providing stimulus in the form of aid to state and local governments will also cost millions of jobs. Blocking stimulus is also exacerbating racial inequality. Due to the impact of historic and current systemic racism, Black and Latinx communities have seen more job loss in this recession, and have less wealth to fall back on. The lack of stimulus hits these workers the hardest. Further, workers in this pandemic aren’t just losing their jobs—an estimated 12 million workers and their family members have lost employer-provided health insurance due to COVID-19. Senate Republicans are failing struggling families.