Millions of Americans to lose jobless benefits on Labor Day

Approximately 7.5 million Americans will be losing their pandemic unemployment benefits by Labor day, when federal pandemic policies will expire. On September 6, the $300 per week will end for 7.5 million Americans. The cut will be the largest cut in federal unemployment benefits in U.S.’s recorded history.  

The cut isn’t the first this year, as 4 million unemployed workers lost some if not all their benefits after 26 states opted out of federal programs early in June and July.  

These federal benefits were put in place in March last year to cushion households from the economic downturn brought about by the pandemic. And even though they were meant to be temporary, American lawmakers have since been extended them thrice.  With every extension, the number of unemployment beneficiaries increased, and so did the weekly stipend given to the recipients. Approximately $567 billion of the $6 Trillion government stimulus has gone towards these benefits from the pandemic’s start.

The unemployment benefits are said to expire this weekend, and it is doubtful that there will be another extension seeing that the economy is improving. The unemployment rate in July this year fell to 5.4%, with 4 million jobs added in July. The economy may be improving, but low-income earners, women, and people of color will be the worst hit by this expected cut. With the employment rate in the black community being at 8.2%, many remain unemployed and are going to take a hefty blow when these federal benefits expire on September 6, 2021. Additionally, the delta variant complicates the situation more, with fewer people wanting to go back to work because of the uncertainty caused by the variant.

For Americans, the abrupt loss of pandemic unemployment benefits will set into motion other long-term effects. The impact of which will be felt by the recipients of the benefits and the economy as a whole. And Of those who lost their benefits prematurely in June are finding it hard to find jobs immediately. According to a team of economists, only 1 in 8 workers found a job by August 6.

Economists predict that people already dependent on the benefits will be plunged into poverty with the end of these benefits. Economists also warn that cutting off these benefits while people are still struggling to find work could slow the nation’s economic recovery. However, some economists do not share this sentiment, and they believe that these benefits are a disincentive to work. Rachel Grezler, a research fellow in economics, budget, and entitlements at the Heritage Foundation, said, “It’s hard to justify having a program that’s encouraging people not to work at the same time employers are struggling to keep their business (going).” 

President Joe Biden has urged states with high unemployment rates to continue paying benefits to certain groups past the benefit cutoff using the federal funds allocated to states by the American Rescue Plan. It is, however, still unclear whether states will comply with this request.

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