As supplemental unemployment insurance payments are due to expire, the jobless face an anxious period
Myra Colon is insulted by insinuations by congressional representatives that a supplemental $600 weekly unemployment insurance payment is discouraging her from returning to work.
Nowhere near the truth, said the 49-year-old single mother who suffers from asthma and an immune disorder.
What's keeping her sheltered in her Bronx apartment with her 12-year-old son with special needs is fear — fear of catching a disease that has infected better than half of the residents, many of them front-line workers, in her Pelham Gardens zip code.
"It's not valid. It's not true," Colon said. "Everyone is looking to work."
The $600 supplemental benefit has allowed Colon to at least partially cover rent, utilities and food. Even with the the additional assistance over the $504 regular weekly payment from New York's unemployment insurance program she still had to borrow from family to make ends meet.
"People are in a bind. There are people who are educated and want to work but can't because businesses are shut down," she said.
As enhanced unemployment benefits and a federal eviction moratorium lapses this weekend, 24 million Americans say they have little to no chance of being able to pay next month’s rent, a U.S. Census Bureau survey shows.
A disproportionate share of those in danger come from Black and Hispanic households, two groups who have borne the brunt of negative health and economic impacts from the COVID-19 pandemic.
While Congress works to negotiate a new stimulus, experts warn the time to ward off an eviction and foreclosure crisis has almost run out.
"We're about to fall off a massive cliff and see a major spike in evictions," said Alanna McCargo, vice president of housing finance policy at the Urban Institute.
More than 3.2M have filed in NY
More than 3.2 million New Yorkers filed first-time unemployment insurance claims in the 19 weeks since mid-March, according to records from the New York state Department of Labor.
The maximum state unemployment benefit is $504.
Though some have returned to work, according to the June survey about 1.5 million people across the state remain without a job. At the same time last year, 363,000 New Yorkers were listed as jobless.
Across the nation, more than 25 million workers will lose the $600 federal unemployment supplement in the week ending July 31, a benefit that pumped more than $15 billion per week into the economy, according to The Century Foundation, a nonprofit think tank.
On Friday, the state Department of Labor dispatched the following text message to recipients: "Under current Federal law and US DOL guidelines, this is the last benefit week for $600 FPUC (Federal Pandemic Unemployment Compensation) payments."
"Losing that supplemental insurance is going to be radical for me," Colon said. "Bottom line, it will put me into a place where I have to pick and choose what to pay for."
Workers face child care, safety issues
Colon has worked for Microsoft and several other employers as a life-long New York City resident. She's willing to work, but foremost is the safety of herself and her son, and she's not about to sacrifice either as long as there is no lasting pandemic control.
Critics of expanding unemployment insurance argue that the extra money discourages Americans from finding new work, especially since many low-wage workers in hard-hit industries like restaurants and retail have received more money in unemployment.
"This is turning into a deterrent to get people to go back to work," says Michael Busler, a public policy analyst and a professor of finance at Stockton University in New Jersey. "The stimulus has been sufficient so far. But we could be going through a second wave of the virus. Let’s give it more time and reconsider later."
The bonus benefit has posed challenges for businesses that need to recruit low-wage workers. Employers in low-cost areas of the country will likely be disproportionately affected as the cost of living varies geographically. Employers that want new, low-wage workers will need to pay more until the higher benefit levels expire, experts say.
Kerri Bonich of North Babylon, who was laid off from her retail job in March, would return to work at a moment's notice, but the single mother has a complicating issue: her 10-year-old son. With school and summer programs on hold because of the pandemic, there is no one to care for the child.
"I feel helpless," she said. "No one wants to sit at home. A majority of Americans like to work."
The $600 supplemental payment allowed her to attend to rent and utilities, but even with extra money the weekly unemployment didn't cover all the expenses. She received Supplemental Nutrition Assistance Program assistance to help with the food bills.
Without the added unemployment, she fears for the near-term.
"It's hard to see a future after this week," she said. "I cannot fathom how people can't fathom the plight of the middle class. I feel they (the Senate) are so detached from our reality."
Economists say unemployment benefits are important
Many economists say supplemental unemployment benefits are important for the U.S. economy.
There is widespread belief among economists that supplemental unemployment benefits are as important to the nation's financial well-being as the Payroll Protection Program, which provided forgivable loans to private employers.
"Removing this lifeline would only drive the economy into a deeper recession," warns Michael Klein, professor of international economic affairs at The Fletcher School at Tufts University and former chief economist in the Office of International Affairs of the Department of the Treasury.
More than two-thirds of workers on jobless benefits are making more in unemployment than they did while working, and one in five eligible unemployed workers will receive benefits at least twice as large as their lost earnings, according to economists at the University of Chicago.
Experts say it's difficult to calculate exactly how many people are making more money on unemployment because the CARES Act opened the door for more groups to apply for aid who typically don't qualify for traditional unemployment, including furloughed employees, self-employed, independent contractors, temporary workers and gig workers.
State unemployment programs only cover about 41% of someone’s lost wages, according to The Brookings Institution. The average hourly wage in the U.S. is $25.72. Congress aimed to cover 100% of lost wages given the severity of the recession.
But customizing the benefits to match people’s salaries posed challenges due to outdated state unemployment systems. In March, Congress opted to give Americans a $600 bonus payment to equal the average wage, or about $1,000 per week.
State benefits average just $370 a week, according to Goldman Sachs estimates. That's down from about $970 per week with the extra $600 benefit.
How do new proposals stack up against wages?
Senate Republicans were scrambling late this week to finalize a $1 trillion coronavirus relief package.
Proposed Republican legislation will include a limited extension of unemployment benefits, Treasury Secretary Steven Mnuchin has said. The supplemental benefit will be restructured so that instead of a $600 flat rate, a new formula would be used to replace 70% of a worker's lost wages through combined state and federal benefits. That would lower the federal benefit to about $200 a week for the average worker.
As layoffs continue, some economists fear that reduced payments won't be enough to help struggling Americans as more states halt re-openings and businesses shutter. In May and June, 7.5 million unemployed Americans went back to work, and roughly 70% of that group would have made more drawing unemployment, according to Heidi Shierholz, senior economist and director of policy for the left-leaning Economic Policy Institute.
"Concerns about the work disincentive simply ignore the realities of the labor market for working people, who will be very unlikely to turn down a job for a temporary boost in benefits, particularly when it is now clear that jobs are going to be scarce for a very long time,’’ Shierholz said in a blog post. "Cutting off the $600 cannot incentivize people to get jobs that aren’t there.’’
Klein of Tufts University agrees.
"This safety net is really important," Klein says. "The disincentive argument is something to be concerned about in normal times, but these aren’t normal times."
Jeff Platsky covers transportation and the economy for the USA TODAY Network New York. He can be reached at JPLATSKY@Gannett.com and followed on Twitter @JeffPlatsky.