- Federal unemployment benefits are set to expire in a little over a month; 26 states ended them early.
- In July, the Delta variant is increasingly jeopardizing plans of many to return to work — and the office.
- There’s little discussion in Congress about renewing the programs, as 20 million face a shortfall.
Natasha Binggeli, 38, has already lost her unemployment benefits. She’s in South Carolina, where federal benefits ended on June 27. That’s two months before they were set to end in September.
Workers there are one of several groups suing over the early termination of benefits.
“We were ready for the September end date, because my daughter goes back to school August 19th. We were prepared,” Binggeli told Insider. Luckily her landlord has been understanding; she’s currently a month-and-a-half behind on rent.
Binggeli had worked as a caregiver until the pandemic hit. She told Insider she had cancer several years back, and since then her immune system “has been shot.” She didn’t want to go out into the world until the vaccine was released.
Childcare has also been a major barrier for Binggeli. The jobs available are paying minimum wage, which she said she used to make work. “Right now,” she said, “minimum wage is not a livable wage. And I will literally just be paying for my daughter’s childcare and coming home with nothing after the week.”
In September, over 20 million Americans are set to join Binggeli in losing their unemployment benefits, according to an analysis from the left-leaning People’s Policy Project. That’s when the extension — and expansion — of federal benefits from President Joe Biden’s American Rescue Plan is set to expire. That might be too soon for benefits to end, as the US contends with a surge in the contagious Delta variant.
Right now, the extension of benefits rests in the hands of the White House and Congress, as Democrats hash out a party-line reconciliation package. But the planned spending doesn’t offer the same kind of relief from Biden or Trump’s previous stimulus packages. More pandemic aid is not on the agenda. Whether through extended benefits or new wage incentives, economists say that workers need more money.
The case for extending benefits
Binggeli’s story shows the impact that early expiration of benefits had on jobless workers. But, as the Delta variant rises, plans for the fall are suddenly being thrown into jeopardy.
“My fear is that everyone’s going to start getting sick again,” she said. “I don’t understand how there’s a sign of normality when people are starting to fight for their lives again with this new Delta variant.”
Marc Goldwein, head of policy at the nonpartisan Committee for a Responsible Federal Budget, told Insider that there should be discussion around at least extending how many weeks people are eligible. Even before the rise of the Delta variant, Goldwein said projections showed there would still be “decent unemployment”come Labor Day.
While benefits don’t quite need to be as high as they are, he said, it isn’t “necessarily time to cut off benefits altogether, and I do worry that nobody is thinking about this at the moment.”
An analysis from payroll platform Gusto found that low vaccination rates — and not enhanced unemployment benefits — may still be keeping workers at home. Their research found that was true of workers in Alabama, the country’s least vaccinated state.
But Ahmad Ijaz, the executive director of Center for Business and Economic Research at the University of Alabama, told Insider that unemployment compensation won’t get extended simply because of the Delta variant.
“Unemployment compensation might get extended if you start seeing mass layoffs — if a lot of businesses start laying off people, then you might see an extension in unemployment benefits,” he said. “But nobody’s going to extend unemployment benefits just because there’s a Delta variant.”
“I think there are definitely some workers with health concerns that would still benefit from higher unemployment insurance,” Amanda Weinstein, an economics professor at the University of Akron in Ohio, said in an interview. “Some of what’s holding people back is still nervousness and going back to work at a job where you’re potentially interacting with people.”
Raises and bonuses might also do the trick
Ijaz said that enhanced benefits aren’t the only thing keeping people out of the workforce. Childcare might also be weighing on the economy. “It would be a great incentive to raise wages to bring people back to work,” he said.
Louis Pantuosco, the chair of the accounting, finance, and economics department at Winthrop University in South Carolina, concurs. He said he would be “shocked” if unemployment benefits got extended in the state, and that it could complicate the labor shortage even further.
“What are you going to do to get these people to come back to work? The better thing is — in my opinion — is when these companies are offering bonuses and incentives to get people to come work for them,” he said.
But Pantuosco noted that this may be easier for bigger companies, since they have bigger margins and volume.
“If the federal government wants to help somebody, I would focus on those small businesses,” he said. “Because they’re the ones that are really getting clobbered with the higher wages.”
More pandemic aid is not on the agenda
Though millions of people will stop receiving federal aid on Labor Day, Congress doesn’t appear interested in extending these benefits.
Senate Finance Committee Chair Ron Wyden of Oregon said earlier this week that including a comprehensive unemployment insurance reform bill and an extension of federal benefits for workers remains a key priority of his. The White House hasn’t committed to the idea yet.
Wyden may crash into resistance from Democratic moderates who believe the economy is on a strong path to recovery and people should return to work. Sen. Joe Manchin of West Virginia is one of them.
“The bottom line is people should be working. We have 9 million jobs we can’t fill,” Manchin said in an Friday interview, in response to a question about renewing a federal eviction ban. “Wages are going up, people can get good jobs and hopefully acquire new skillsets. It’s a worker’s market.”
Extending benefits may also prove complicated in large parts of the country. Twenty-six mostly Republican states have already turned off their federal unemployment programs. Any extension beyond September 4 may simply not be taken up by Republican-led states.
It may be left up to the unemployed to sue for their benefits to be restored, given the Biden administration hasn’t intervened through the summer. Already, workers in three states — Indiana, Maryland, and Arkansas — have scored legal wins on their own.
Binggeli, the unemployed worker in South Carolina, said she thinks the government should “absolutely” consider extending benefits.
“We’re basically labeled as lazy, like we don’t want to go back to work, but it’s not true. It’s not true. I want the world to go back to normal. I hate it. I can’t stand it,” she said. “I wish Biden would tell these governors: Look, your people need help.”