While Labor Day 2021 celebrated the employed, it also marked the last day of extended unemployment benefits meant to help out-of-work Americans during the pandemic. Across the country, roughly 7.5 million workers lost the subsidies while another three million faced seeing the extra $300-per-month boost disappear, according to a report by the Century Foundation. Critics for and against ending the aid agree on one thing: It will cost the economy.
As the country shut down many of its businesses during the COVID pandemic, families struggled to make ends meet. Layoffs lasted much longer than the estimated two weeks to flatten the curve. The government decided it had to do something to help people put food on the table, so it came up with three programs:
- Pandemic Unemployment Assistance (PUA): Allowed workers, especially gig workers, who lost jobs because of the virus to receive financial aid.
- Federal Pandemic Unemployment Compensation (FPUC): Added $600 to the average unemployment weekly payout for a time and then later dropped that to an extra $300.
- Pandemic Extended Unemployment Compensation (PEUC): Granted additional weeks of payments if a state had exhausted its unemployment benefits.
Together, these assistance programs paid out nearly $800 billion to the unemployed. Now, that help is no longer available. Nearly half of the states — 23 — already had ended the federally funded unemployment programs, and all but one were Republican-led. Arkansas, Indiana, and Maryland tried to do the same, but state judges ordered them to reinstate the aid.
The Ramifications for the Economy
There are more than ten million jobs available and about 5.5 million unemployed Americans. But returning to work isn’t always easy. Critics of cutting the benefits cite problems finding childcare as one of the big obstacles, especially during the wave of a more contagious strain of the virus. Vaccine mandates are making it difficult for those who do not wish to get the jab, and some have become accustomed to staying home while the government takes care of financial matters.
Advocates for ending the extra benefits argue against perpetuating a reliance on Uncle Sam and instead push for more people to go back to work. Paying out the extra money for the unemployed, it is suggested, has made it too easy for citizens to stay home. Meanwhile, business owners are having a difficult time finding enough employees to staff their operations. For August, only 235,000 jobs were added to the market instead of the expected 728,000. Justin Wolfers, an economist at the University of Michigan, said:
“Today’s dreadful jobs report – which basically put the recovery on ice for a while – is yet another reminder that the virus is the economy. Delta roars and the recovery retreats.”
Both sides, however, do agree on one thing: The economy will suffer. The Century Foundation, a left-leaning organization, suggested ending the programs will drain about $5 billion a week from the economy while Fox Business estimated about a $2 billion cut in household spending.
Will the end of benefits force more people to seek employment? Will the Democrats decide to add another infrastructure bill that includes more unemployment monies? Only time will tell. Meanwhile, the economy, already reeling from a serious blow to the jaw, will be tested once again as millions of unemployed find their resources dried up at a time when inflation is on the rise. Then there are the military personnel returning from a 20-year war in Afghanistan, not to mention the refugees, who will also need work and financial assistance — but that discussion is for another time.
Read more from Kelli Ballard.
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