By Elisabeth Buchwald
Unemployed Americans have seen their benefits shrink over the past few months, and the holiday season will bring yet another financial blow — and it’s not related to shopping for presents.
First came the expiration of the extra $600 a week in enhanced unemployment benefits in July, which lowered the average amount of weekly unemployment benefits Americans received to $257 from $812. Now an even more grim cut-off is set to take place a day after Christmas, when 12 million Americans will see their unemployment benefits drop to zero. That’s according to a new report by Andrew Stettner and Elizabeth Pancotti from the liberal-leaning Century Foundation. As a result, personal incomes may see a roughly $226 million drop .
These Americans include gig workers, freelancers and self-employed workers, as well as jobless Americans who will exhaust the maximum number of weeks that an individual can receive jobless benefits in their state.
In pre-pandemic times, gig workers, freelancers and self-employed workers were ineligible for unemployment benefits.
But through a CARES Act program known as Pandemic Unemployment Assistance, these workers became eligible for the $600 a week in federal unemployment benefits, which expired in July. They were also eligible for state unemployment benefits that were calculated based on the average weekly unemployment benefits in their state.
That’s set to expire on Dec. 31 but because state workforce agencies typically pay out unemployment benefits on Saturday some 7.3 million Americans who have received benefits through the PUA program will be receiving their last checks on Dec. 26 — just one day after Christmas.
Another 4.65 million Americans will also see their benefits drop to zero on the same day. These Americans were approved for an additional 13 weeks of unemployment benefits through another CARES Act program, Pandemic Emergency Unemployment Compensation, after exhausting the number of weeks they were granted by their states.
The largest share of workers affected by the lapse in PUA and PEUC benefits are from California and New York, where 2.3 million and 1.4 million workers will stop receiving unemployment benefits entirely on Dec. 26, the Century Foundation report found.
The prospect of lawmakers passing a second stimulus package before these benefits — and several other financial relief programs — expire by the end of the year is increasingly unlikely.
Past research suggests that the longer Americans remain unemployed, especially without unemployment benefits, the less likely they are to become reemployed, making them prone to leaving the workforce altogether. If they are able to land a new job, they’re more likely to accept offers for wages that are significantly lower than their prior jobs.
That’s because “as joblessness spells drag on, workers’ skills erode, they become discouraged, and they’re more likely to face discrimination by potential employers,” Stettner and Pancotti wrote. “Workers who are unemployed for substantial periods of time lower their consumption, draw down savings to make ends meet, and increase borrowing.”
On top of which, they’re also more likely to delay medical visits and refilling prescriptions, according to a 2011 report jointly published by the Kaiser Family Foundation and NPR.
These Americans are in “grave danger”, the authors wrote, if lawmakers leave them behind between now and Dec. 26.