The president has encouraged some states to continue helping the long-term unemployed, but administration officials said it was time for enhanced federal aid to end.
WASHINGTON — Expanded unemployment benefits that have kept millions of Americans afloat during the pandemic expired on Monday, setting up an abrupt cutoff of assistance to 7.5 million people as the Delta variant rattles the pandemic recovery.
The end of the aid came without objection from President Biden and his top economic advisers, who have become caught in a political fight over the benefits and are now banking on other federal help and an autumn pickup in hiring to keep vulnerable families from foreclosure and food lines.
The $1.9 trillion economic aid package Mr. Biden signed in March included extended and expanded benefits for unemployed workers, like a $300-per-week federal supplement to state jobless payments, additional weeks of assistance for the long-term unemployed and the extension of a special program to provide benefits to so-called gig workers who traditionally do not qualify for unemployment benefits. The expiration date reached on Monday means that 7.5 million people will lose their benefits entirely and another three million will lose the $300 weekly supplement.
Republicans and small business owners have assailed efforts to extend the aid, contending that it has held back the economic recovery and fueled a labor shortage by discouraging people from looking for work. Liberal Democrats and progressive groups have pushed for another round of aid, saying millions of Americans remain vulnerable and in need of help.
Mr. Biden and his advisers have pointedly refused to call on Congress to extend the benefits further, a decision that reflects the prevailing view of the state of the recovery inside the administration and the president’s desire to focus on winning support for his broader economic agenda.
The president’s most senior economic advisers say the economy is in the process of completing a hand off between federal assistance and the labor market. As support from the March stimulus law wanes, they say, more and more Americans are set to return to work, drawing paychecks that will power consumer spending in the place of government aid.
And Mr. Biden is pushing Congress this month to pass two measures that constitute a multi-trillion-dollar agenda focused on longer-run economic growth: a bipartisan infrastructure bill and a larger, partisan spending bill with investments in child care, education, carbon reduction and more. That push leaves no political oxygen for an additional short-term aid bill, which White House officials insist the economy does not need.
Administration officials say money that continues to flow to Americans from the March law, including new monthly payments to parents, will continue to sustain the social safety net even as the expanded federal jobless aid expires. Mr. Biden has called on certain states — those with high unemployment rates and a willingness to continue aid to jobless workers — to use state relief funds from the March law to help the long-term unemployed. So far, no state has said it plans to do so.
On Sunday, Mr. Biden’s chief of staff, Ron Klain, told CNN’s “State of the Union” that the March law was also allowing states to help those out of work by offering employment bonuses and job training and counseling.
“We think the jobs are there,” Mr. Klain said, “and we think the states have the resources they need to move people from unemployment to employment.”
Mr. Biden has faced criticism from the left and the right on the issue, and he has responded with a balancing act, supporting the benefits as approved by Congress but declining to push to extend them — or to defend them against attacks by leaders in some states.
Throughout the summer, business lobbyists and Republican lawmakers called on the president to cut off the benefits early, blaming them for the difficulties some businesses were facing in hiring workers, particularly in lower-paying industries like hospitality. Soon after the backlash began, Mr. Biden defended the benefits but called on the Labor Department to ensure that unemployed workers who declined job offers would lose their aid.
But roughly half of the states, nearly all of them led by Republican governors, moved to cut off benefits early on their own. Mr. Biden and his administration did not fight them, angering progressives. The administration is essentially extending that policy into the fall, by calling on only willing states to fill in for expired assistance.
“I don’t think we necessarily need a blanket policy for unemployment benefits at this point around the country,” Labor Secretary Martin J. Walsh said in an interview on Friday, “because states are in different places.”
Privately, some administration officials have expressed openness to the idea that economic research will eventually show that the benefits had some sort of chilling effect on workers’ decision to take jobs. Critics of the extra unemployment benefits have argued that they are discouraging people from returning to work at a time when there are a record number of job openings and many businesses are struggling to hire.
Evidence so far suggests the programs are playing at most a limited role in keeping people out of the work force. States that ended the benefits early, for example, have seen little if any pickup in hiring relative to the rest of the country.
Even in the industries that have had the hardest time finding workers, many people don’t expect a sudden surge in job applications once the benefits expire. Other factors — child care challenges, fear of the virus, accumulated savings from previous waves of federal assistance and a broader rethinking of work preferences in the wake of the pandemic — are also playing a role in keeping people out of work.
“I think it’s a piece of the puzzle but I don’t think it’s the big piece,” said Ben Fileccia, the director of operations and strategy for the Pennsylvania Restaurant & Lodging Association. “It’s easy to point to, but I don’t think it’s the true reason.”
Progressives in and outside of Congress have grown frustrated with the administration’s approach to the benefits, warning it could backfire economically. Job growth slowed in August as the Delta variant spread across the country.
“Millions of jobless workers are going to suffer when benefits expire on Monday, and it didn’t need to be this way,” Senator Ron Wyden, Democrat of Oregon and the chairman of the Finance Committee, said in a news release last week. “It’s clear from the economic and health conditions on the ground that we shouldn’t be cutting off benefits now.”
Elizabeth Ananat, a Barnard College economist who has been studying the impact of the pandemic on low-wage workers, said that cutting off benefits now, when the Delta variant has threatened to set back the recovery, was a threat to both workers and the broader economy.
“We’ve got this fragile economic recovery and now we’re going to cut income from people who need it, and we are pulling back dollars out of an economy that is still pretty unsteady,” she said.
Ms. Ananat has been tracking a group of about 1,000 low-income parents in Philadelphia, all of whom were working before the pandemic. More than half lost their jobs early in the pandemic last year. By this summer, 72 percent were working, reflecting the strong rebound in the economy as a whole. But that still left 28 percent of the group who were unemployed, either because they could not find work or because of child care or other responsibilities.
“We’re going into a new school year where there’s going to be a lot more uncertainty than there was this spring for parents,” Ms. Ananat said. “Employers are again going to be dealing with a situation where they have people who want to work, but what the heck are they supposed to do when their kid gets sent home to quarantine?”
Measures of hunger and other hardship have fallen this year, as the job market has improved and federal aid, including the expanded child tax credit, has reached more low-income families. But the cutoff in benefits could change that, Ms. Ananat said. “In the absence of some kind of solution, this cliff comes and that number is going to go back up,” she said. “This is a significant group of people who are going to be in a lot worse shape.”
Source: Economy - nytimes.com