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Federal safety net programs that have provided additional unemployment benefits for workers who lost their jobs during the coronavirus pandemic are set to end.
Approximately 12 million out-of-work Americans are expected to lose federal unemployment benefits this month when coronavirus aid programs established through the CARES Act expire.
Around 7.3 million people will lose Pandemic Unemployment Assistance (PUA), which was created to assist workers left out of the normal unemployment system, such as freelancers and gig workers, when the program expires Dec. 26, according to a new report by The Century Foundation.
The program could be extended, but congressional negotiations over additional coronavirus relief, including provisions to help the millions of people who lost their jobs, stalled out ahead of the presidential election. If Congress fails to act before the year’s end, workers receiving PUA payments will have no other source of unemployment funds, said Andrew Stettner, a senior fellow with the Century Foundation and author of the report.
“Those workers will have nothing at all. We know many of them are not going to be able to find work,” Stettner said.
Workers who have relied on traditional unemployment programs may also see their benefits cut off in the coming weeks. State unemployment benefits have already run out for many who lost their jobs at the start of the pandemic. While those people without work have been able to continue receiving benefits through federal extension programs, the payments will expire in late December.
About 4.6 million people are expected to be cut from Pandemic Emergency Unemployment Compensation benefits, which provided extended unemployment benefits for 13 weeks after workers exhausted state unemployment insurance. Another federal unemployment program, known as Extended Benefits, may provide a safety net for at least some of those workers, but it will depend on the state in which they reside.
Extended Benefits can provide between 13 and 20 additional weeks of unemployment in states experiencing high unemployment for workers who already received all of the regular unemployment payments their state allows. But only 17 states and Washington, D.C. are projected to meet the high unemployment threshold and have the benefit in place at the end of December benefit, Stettner said.
These states include Alaska, California, Connecticut, Georgia, Hawaii, Illinois, Louisiana, Massachusetts, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, and Washington. Virginia late last month issued a notice that it’s extended benefits would end Nov. 21 because the local employment rate had improved.
Recent analysis from the Economic Policy Institute indicates that fewer than half of the 1.5 million workers who have already exhausted PEUC benefits are receiving Extended Benefits.
While the federal government now covers the full amount of EB payments, states will have to begin paying half the cost beginning in January. Three million workers are expected to qualify for the EB payments and states budgets could take a significant hit as they would be on the hook for an estimated $450 million a week in payments, Stettner said.
“States are quickly going into the red and the debts will be very large and have the potential to exceed those of the Great Recession,” he said.
The job market has shown signs of improvement since the initial months of the pandemic, with the unemployment rate dropping to 6.9% in October from a high of 14.7% in April. But in recent weeks, as the coronavirus again surged across the country, Labor Department figures suggested that rebound was faltering. By the end of November, initial jobless claims rose for two straight weeks, with 778,000 people applying for unemployment assistance in the week that ended Nov. 21.
Out-of-work Americans have already seen a decline in unemployment aid from the federal government. The $600-a-week boost in federal unemployment benefits that supplemented state-administered payments earlier in the pandemic expired in July, and the money for subsequently approved $300-a-week payments also ran out.
Although federal lawmakers renewed efforts to pass emergency relief legislation this week, prospects for passage of any bill that would extend unemployment provisions remain uncertain. While waiting for aid from Congress, some states have included expanded unemployment benefits in their own coronavirus relief measures. Both New Mexico and Montana will use federal coronavirus relief funds, which must be spent by the end of the year, to pay unemployment benefits.
New Mexico will issue flat, one-time supplemental payments of $1,200 to eligible unemployed eligible individuals. Montana will pay an additional $200 a week to eligible individuals through December 19.
“The states have limited ability to act,” Stettner said. “But they can’t solve this on their own.”
Andrea Noble is a staff correspondent with Route Fifty.