More than 7.5 million jobless Americans struggling to pay their bills will lose their extended unemployment assistance this week — marking the largest cutoff of unemployment benefits in history.
The cessation of federal benefits will also affect gig workers, caregivers and independent contractors who traditionally aren’t eligible to apply for unemployment. The move comes as many states battle a surge of COVID-19 cases and the expiration of eviction moratoria across the country.
But with an ongoing labor shortage in the United States, in part due to ongoing health concerns, experts said it is unlikely the federal government will extend benefits again, leaving low-income Americans scrambling for solutions.
“Expanded unemployment benefits have been a lifeline for millions,” said Peter Hepburn, a professor of sociology at Rutgers University in New Jersey. “They’ve helped families to keep food on the table, kids out of poverty and rent paid. It seems almost inevitable that losing these benefits is going to make life harder for a lot of people.”
In question and answers, USA TODAY explains what is happening with unemployment benefits and why Americans might not see economic relief any time soon.
Are unemployment benefits ending?
Yes, all pandemic unemployment benefits ended Monday on Labor Day, with no grace period to file beyond this date. Payments will be made through the week ending on Friday. At that point, many unemployed Americans will see their benefits cut by $300 a week.
Since the onset of the coronavirus pandemic, the federal government has delivered more than $800 billion in unemployment benefits.
Unemployment checks, originally $600 and then lowered to $300, were enacted last year under the CARES Act by former President Donald Trump. For the first time, independent contractors and gig workers who had lost income due to the economic downturn received unemployment known as the Pandemic Unemployment Assistance.
The government also continued to boost unemployment through the Federal Pandemic Unemployment Compensation in states with reduced unemployment insurance, paying on average an additional $334.
In many cases, jobless Americans could collect both.
Through the American Rescue Plan passed in March, President Joe Biden extended all of these programs, including the maximum duration from 24 to 53 weeks. In states with high unemployment, people could receive up to 86 weeks of benefits.
Will unemployment be extended again in some states?
No state has decided to continue issuing $300 checks beyond the federal deadline.
Treasury Secretary Janet Yellen told states last month they could earmark $350 billion of funds from the American Rescue Plan to continue paying unemployment benefits locally.
Republicans have argued that extended unemployment assistance was contributing to the ongoing labor shortage across the country.
While the unemployment rate is currently 5.2% — well under the record high of 14.7% at the height of the pandemic amid record layoffs and shelter-in-place orders — many have criticized the slowing speed of economic recovery.
The U.S. Department of Labor reported the economy added a disappointing 235,000 jobs in August, well under the 750,000 jobs economists had predicted and the White House expected.
About two-dozen Republican-led states had cut off enhanced unemployment benefits earlier in the summer: Alabama, Alaska, Arizona, Florida, Georgia, Idaho, Iowa, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia and Wyoming.
Governors in these states claimed that residents were not taking available jobs because they preferred to collect unemployment instead. The federal minimum wage has remained at $7.25, which is about $314 a week — a few dollars over what jobless Americans were collecting.
Ending unemployment benefits early could have cost local state economies up to $12.3 billion, a report by the U.S. Congress Joint Economic Committee found. The Center on Budget and Policy Priorities, a think tank that analyzes federal and state government budget policies, has estimated that each dollar paid in unemployment turns into $1.61 in local spending.
What is a back-to-work bonus?
Some states have launched programs using funds from the American Rescue Plan to incentivize people for taking a job.
Arizona set aside $300 million of federal funds to offer a one-time $2,000 bonus for people who rejoin the workforce with a full-time job. Those who go back to work part-time receive a $1,000 one-time stipend. Workers must also make less than $25 dollars an hour or the equivalent salary of $52,000 a year.
Arizona Gov. Doug Ducey’s office also announced the state would cover up to three months of child care for returning workers.
Montana’s Return-to-Work Bonus initiative will pay workers $1,200 who discontinue taking unemployment benefits after completing four weeks of work. According to the state’s website, workers must be willing to take a job in any industry.
And under Oklahoma’s program, workers would also receive $1,200 after six weeks at a new job.
Who can still apply for unemployment?
While pandemic unemployment has ended, regular unemployment is still available.
Each state sets its own guidelines on how it issues unemployment insurance. In many cases, unemployment is available to salaried workers that lose their jobs through no fault of their own.
Applicants must meet work and wage requirements and there is a limit for how many weeks can be claimed.