Jobless Benefits Are Keeping Americans Afloat. Republicans Still Want To Cut Them.

Millions of out-of-work Americans stand to lose their additional $600-a-week jobless benefits from the federal government at the end of July. Yet another analysis released Tuesday shows that those benefits, along with the coronavirus relief payments, have helped Americans feed themselves and pay their utility bills during the pandemic.

The enhanced safety net provided by the Coronavirus Aid, Relief and Economic Security Act also appears to have given many Americans considerable peace of mind, causing them to worry far less about covering basic expenses like their rent or credit card bills, according to the new research from the Urban Institute

Members of Congress have not reached a deal to extend those federal unemployment benefits beyond July 31, and many Republicans have claimed that such extra payments make workers lazy and should be ended. But researchers Michael Karpman and Gregory Acs, the authors of the Urban Institute analysis, cautioned that economic hardship is likely to increase if the enhanced benefits disappear.

“The assistance from the CARES Act is likely protecting many families from very serious hardship,” Karpman told HuffPost. “There’s a significant risk that reducing assistance too quickly, by letting the weekly benefit supplement expire after July, could mean a lot more people have trouble paying the rent or affording food or being able to get medical care.”

The lockdowns and social distancing measures meant to slow the spread of the coronavirus led to a record wave of jobless claims and a historic drop in economic activity. The CARES Act was one piece in a volley of stimulus efforts from Congress and the White House aimed at blunting the worst of that damage.

The assistance from the CARES Act is likely protecting many families from very serious hardship.
Michael Karpman, Urban Institute

The law provided individuals with a one-time relief payment of up to $1,200 and also boosted state-based unemployment benefits with the extra $600 per week. The enhanced jobless benefits were meant to make up for the shortfall that a typical worker sees between her unemployment benefits and her regular wages. The beefed-up payments meant some workers near the lower end of the income scale received more money than they would have through their jobs.

Like other recent papers, including one from the Congressional Budget Office, the analysis from the Urban Institute suggests that the aid in the CARES Act did what its advocates hoped it would ― help Americans avoid financial ruin during a precipitous downturn.

Through surveys done amid the pandemic, researchers found that food insecurity dropped 3 percentage points among those who received unemployment benefits, from 27.1% to 24.1%. On the other hand, material hardship ― like difficulties in paying rent or utility bills or meeting other basic needs ― increased more than 5 percentage points, from 39.8% to 45.2%, among those who applied for unemployment benefits but hadn’t received them.

Notably, researchers found that unmet medical needs increased nearly 9 percentage points among the latter group, from 25.4% to 34.2%. In other words, the folks who hadn’t secured unemployment benefits were far more likely to be unable to pay for prescription drugs or doctor visits.

The surveys also revealed a significant mental benefit to the aid, with recipients of unemployment benefits reporting sizable drops in how much they worried about their expenses. The share of people concerned about having enough food to eat fell more than 12 percentage points, from 31.9% to 19.5%, and the share of those concerned about paying their rent or mortgage fell 17 percentage points, from 48.4% to 31.3%.

Unemployment benefits have helped laid-off workers avoid going hungry. Who knew.

Unemployment benefits have helped laid-off workers avoid going hungry. Who knew.

Karpman described those decreases as “pretty remarkable.” Losing a job, he noted, can do plenty of damage beyond missed bills and a sparse pantry.

“It’s also the stress that people are under, which can affect both parents and have a spillover effect on the well-being of their children,” he said.

A second analysis by the Urban Institute showed just how widespread the economic pain from the pandemic has been. More than 2 in 5 adults surveyed said someone in their household had lost a job or work income due to the coronavirus. Those financial burdens fell disproportionately on Latino workers and families with lower incomes. 

The surveys also seemed to confirm what many people have shared anecdotally: that the unemployment claims process in many states was a debacle. About 36% of respondents said their family had received benefits in the 30 days leading up to being surveyed, but nearly 18% said their families had applied after March 1 but still hadn’t received anything. Of the latter group, more than half said the process was hard.

The Congressional Budget Office found that maintaining the additional $600 unemployment benefit would help the economy and estimated that the jobless rate would be around 16% in the third quarter of the year if Congress and the White House do away with it. But the budget office also noted that keeping the benefit would “weaken incentives to work as people compared the benefits available during unemployment to their potential earnings.”

Members of the GOP have seized upon the latter point as a reason not to renew the federal benefits. Sen. Chuck Grassley (R-Iowa), chairman of the Senate Finance Committee, which oversees the benefits, recently said that Democrats’ proposal to extend them would “encourage unemployment, government dependence and reduced productivity.”

Instead of continuing the $600 payments, some Republicans have proposed offering people a one-time bonus for returning to work before the July 31 expiration of benefits. But such a policy could nudge workers back onto job sites at a time when coronavirus caseloads are increasing in more and more states. It would also do little for those still unable to find work due to slack demand.

“Given the depths of the job losses, and given the uncertainty around how quickly the economy can recover, it’s important to keep in mind a lot of people are likely to need help for an extended period of time,” Karpman said. “Abruptly cutting off assistance could put a significant strain on families.”