Federal Aid (US)

More stories

  • 100 Shares129 Views

    in Economy

    Unemployment Benefits to Millions Are About to End

    by

    The abrupt loss of pandemic unemployment benefits on a broad scale could have long-term effects not only for the recipients but also for the economy.PHILADELPHIA — Tara Harrison has a master’s degree, yet is applying for the low-paying receptionist jobs she last held as a teenager. Evan Ocheret is considering giving up his career in music. Amanda McCarty is worried about losing her place in the middle class. Amanda Rinehart is considering borrowing money from her grandmother or selling blood plasma to feed herself and her son.Unemployment benefits have helped stave off financial ruin for millions of laid-off workers over the last year and a half. After this week, that lifeline will snap: An estimated 7.5 million people will lose their benefits when federally funded emergency unemployment programs end. Millions more will see their checks cut by $300 a week.The cutoff is the latest and arguably the largest of the benefit “cliffs” that jobless workers have faced during the pandemic. Last summer, the government ended a $600 weekly supplement that workers received early in the crisis, but other programs remained in place. In December, benefits briefly lapsed for millions of workers, but Congress quickly restored them.This time, no similar rescue appears likely. President Biden has encouraged states with high unemployment rates to use existing federal funds to extend benefits, but few appear likely to do so. And administration officials have said repeatedly that they will not seek a congressional extension of the benefits.The politics of this cliff are different in part because it affects primarily Democratic-leaning states. Roughly half of states, nearly all of them with Republican governors, have already ended some or all of the federal benefits on the grounds that they were discouraging people from returning to work. So far, there is little evidence they were right: States that cut off benefits have experienced job growth this summer that was little different from that in states that retained the programs.In the states that kept the benefits, the cutoff will mean the loss of billions of dollars a week in aid when the pandemic is resurgent and the economic recovery is showing signs of fragility. And for workers and their families, it will mean losing their only source of income as other pandemic programs, such as the federal eviction moratorium, are ending. Even under the most optimistic forecasts, it will take months for everyone losing aid to find a job, with potentially long-term consequences for both workers and the economy.“I have no idea what I’m going to do once these benefits stop,” Ms. Rinehart said.When the pandemic began, Ms. Rinehart, 33, was an assistant general manager at a hotel in Allentown, Pa. She held on to her job at first, taking her young son with her to work. But when that proved untenable, she left the job, and has been unemployed ever since, most recently living on about $560 a week in benefits, all of which will end this weekend.A single mother, Ms. Rinehart has been unwilling to send her son, now 8, back to the classroom because he has asthma and several other health conditions that make him especially vulnerable to the coronavirus. He is too young to be vaccinated and too young to be left alone, and she has been unable to find a job that would let her work from home.“They should not cut these benefits off until there is a vaccine for all the little humans of all ages, because there are parents like me that have children that are high risk for Covid,” she said.Ms. Rinehart is one of nearly half a million Pennsylvanians who will lose their benefits this weekend, according to estimates from the Century Foundation, a progressive research institute. The state has an unemployment rate of 6.6 percent, well above the national rate of 5.4 percent.Pennsylvania, like the country as a whole, has experienced a significant economic rebound, but a partial one: Domestic tourists this summer again lined up to see Independence Hall and the Liberty Bell, and thrill-seekers again rode the roller coasters at Hersheypark. But many downtown offices in Philadelphia and Pittsburgh remain all but empty, and conventioneers have not yet returned to conference hotels, or to the restaurants and bars that relied on their business. Overall, Pennsylvania has regained about two-thirds of the jobs lost in the pandemic, compared with about three-quarters nationally.“There’s been a partial recovery in a lot of the industries that are shut down, but it’s not back to where it was,” said Barney Oursler, director of the Mon Valley Unemployed Committee, a workers’ rights group in Pittsburgh. The committee was formed in the 1980s in response to layoffs in the steel industry; it has had a second life in the pandemic, helping thousands of Pennsylvanians navigate the state’s unemployment system.Mr. Ocheret, 32, is a professional oboist in Philadelphia. Before the pandemic, he cobbled together a living as a freelancer, performing with symphonies and opera companies up and down the Eastern Seaboard, and picking up the occasional gig with pop artists who wanted onstage orchestra sections. It all dried up almost overnight in March 2020.Performances began to return this spring, and Mr. Ocheret recently picked up a once-a-week gig that will last into September with an orchestra in New Jersey. But his calendar remains sparse this fall, and without unemployment benefits to fall back on, he isn’t sure how he will get by. He has signed up for computer coding courses to give him another option — one that he doesn’t want to take, but that he says he may have to consider if the industry doesn’t rebound by the end of the year.“I hate to stop doing the thing I love,” Mr. Ocheret said. “But if things don’t start to improve, I may have to do something different.”Before the pandemic, Evan Ocheret, a professional oboist in Philadelphia, made a living as a freelancer.Hannah Yoon for The New York TimesThree federal programs will end this weekend. One, which extended regular benefits beyond the 26 weeks offered in most states, covers about 3.3 million people, according to the Century Foundation. A second program, Pandemic Unemployment Assistance, covers 4.2 million gig workers, the self-employed and others who don’t qualify for standard benefits. Nearly three million additional people will lose a $300 weekly federal supplement to other unemployment benefits.When Congress last renewed the programs in March, as part of Mr. Biden’s American Rescue Plan, policymakers hoped that September would represent a return to normal for the economy. If most Americans were vaccinated and the pandemic was under control, then schools and offices could reopen and people could return to work.But the rise of the Delta variant has complicated that picture. Major employers across the country have shelved their return-to-office plans. International tourism remains largely shut down, and restaurants, which were packed for much of the summer, are seeing reservations slow.“We’re in a different place now than we thought we were going to be,” Ms. McCarty said. “The Sept. 6 deadline made sense maybe in May and June. It seems preposterous now.”Ms. McCarty, 43, was furloughed as a buyer for a large Philadelphia clothing retailer at the start of the pandemic. A few months later, the job loss turned permanent, reshaping the McCartys’ lives.The family moved from Philadelphia to Lancaster County in search of cheaper housing. Ms. McCarty’s husband, a graphic designer, earns enough to pay rent, but they are still figuring out how to cover their other bills without the roughly $900 a week they were getting in unemployment benefits. Their 19-year-old daughter has set aside her college plans. And Ms. McCarty, a cancer survivor, is putting off medical tests until she can afford to pay the deductible on her insurance plan.“You put 10, 15, 20 years into a career and then to suddenly not be able to go see a dentist anymore, it feels like something’s wrong there,” she said. “I think I’m still grieving the loss of my opportunity of being middle class, because that’s gone again.”Regular unemployment benefits, without the $300 add-on, replace only a fraction of workers’ lost wages. In Pennsylvania, the maximum benefit is $580 a week, the equivalent of about $30,000 a year. In some Southern states, the maximum benefit is less than $300 a week.Still, decades of economic research have shown that unemployment benefits are at least a bit of a disincentive to seeking work. When the economy is weak, that negative consequence is offset by the positive impact the benefits have on workers, but many economists argue that it makes sense to ramp down benefits as the economy improves.Cutting off benefits for millions of people all at once, however, is another matter.“Losing a job is something that we know from research is one of the most damaging things to your financial and personal well-being over the long run,” said Andrew Stettner, a senior fellow at the Century Foundation. “We’ve avoided those kinds of long-term impacts to a large part during the pandemic because we’ve been aggressive with our forms of support. Now we’re pulling it back, we’re putting people at risk.”Ms. Harrison, despite her master’s degree, has already lost her job twice since the pandemic began. She was furloughed from her human resources job early on. She eventually found work helping to run a Covid-testing business, but was laid off again in March as the pandemic began to ebb. Now she spends her days scouring job boards and sending applications.“It’s going to end,” she said of the unemployment benefits. “You know it’s going to end. So you can’t just sit around and twiddle your thumbs.”Her husband has diabetes and high blood pressure, and they live with her mother, so Ms. Harrison, 47, is reluctant to return to in-person work until the pandemic is under control. Despite having a master’s degree and senior-level experience, she is applying for positions as a receptionist or an administrative assistant — jobs she last did decades ago.“I spent years in school — I spent money out of my own pocket to better educate myself — so that I would be able to be a good breadwinner and take care of my family,” she said. “Never did I think I would be applying to be somebody’s receptionist. But if somebody called me to be their receptionist, I’m taking it.”Jim Tankersley More

  • 125 Shares139 Views

    in Economy

    Cutting off jobless benefits early may have hurt state economies.

    by

    When states began cutting off federal unemployment benefits this summer, their governors argued that the move would push people to return to work.New research suggests that ending the benefits did indeed lead some people to get jobs, but that far more people did not, leaving them — and perhaps also their states’ economies — worse off.A total of 26 states, all but one with Republican governors, have moved to end the expanded unemployment benefits that have been in place since the pandemic began. Many business owners blame the benefits for discouraging people from returning to work, while supporters argue they have provided a lifeline to people who lost jobs in the pandemic.The extra benefits are set to expire nationwide next month, although President Biden on Thursday encouraged states with high unemployment rates to use separate federal funds to continue the programs.To study the policies’ effect, a team of economists used data from Earnin, a financial services company, to review anonymized banking records from more than 18,000 low-income workers who were receiving unemployment benefits in late April.A Small Rise in EmploymentShare of workers on unemployment in late April who later began working.

    Note: Chart reflects data in 19 states that have cut off benefits, and 23 that have retained them. Source: Earnin via Coombs, et al.By The New York TimesThe researchers found that ending the benefits did have an effect on employment: In states that cut off benefits, about 26 percent of people in the study were working in early August, compared with about 22 percent of people in states that continued the benefits.But far more people did not find jobs. In the 19 states ending the programs for which researchers had data, about two million people lost their benefits entirely, and a million had their payments reduced. Of those, only about 145,000 people found jobs because of the cutoff. (The researchers argue the true number is probably even lower, because the workers they were studying were the people most likely to be severely affected by the loss of income, and therefore may not have been representative of everyone receiving benefits.)A Big Drop in BenefitsShare of workers on unemployment in late April who continued to receive benefits in some form.

    Note: Chart reflects data in 19 states that have cut off benefits, and 23 that have retained them. Source: Earnin via Coombs, et al.By The New York TimesCutting off the benefits left unemployed workers worse off on average. The researchers estimate that workers lost an average of $278 a week in benefits because of the change, and gained just $14 a week in earnings (not $14 an hour, as previously reported here). They compensated by cutting spending by $145 a week — a roughly 20 percent reduction — and thus put less money into their local economies.“The labor market didn’t pop after you kicked these people off,” said Michael Stepner, a University of Toronto economist who was one of the study’s authors. “Most of these people are not finding jobs, and it’s going to take them a long time to get their earnings back.”Less Income, Less SpendingAverage impact of ending federal programs on weekly unemployment benefits, earnings and spending, among people who were on unemployment in late April.

    Notes: Data is as of Aug. 6 and includes 19 states that have cut off benefits. Source: Earnin via Coombs, et al.By The New York TimesThe findings are consistent with other recent research that has found that the extra unemployment benefits have had a measurable but small effect on the number of people working and looking for work. The next piece of evidence will come Friday morning, when the Labor Department will release state-level data on employment in July.Coral Murphy Marcos More

  • 125 Shares179 Views

    in Economy

    Eviction Moratorium Set to Lapse as Biden Aid Effort Falters

    by

    The administration made a last-ditch, failed appeal to extend the moratorium to buy more time for states to distribute rental aid.A nationwide moratorium on residential evictions is set to expire on Saturday after a last-minute effort by the Biden administration to win an extension failed, putting hundreds of thousands of tenants at risk of losing shelter, while tens of billions in federal funding intended to pay their back rent sit untapped.The expiration was a humbling setback for President Biden, whose team has tried for months to fix a dysfunctional emergency rent relief program to help struggling renters and landlords. Running out of time and desperate to head off a possible wave of evictions, the White House abruptly shifted course on Thursday, throwing responsibility to Congress and prompting a frenzied — and ultimately unsuccessful — rescue operation by Democrats in the House on Friday.The collapse of those efforts reflected the culmination of months of frustration, as the White House pushed hard on states to speed housing assistance to tenants — with mixed results — before the moratorium expired. Hampered by a lack of action by the Trump administration, which left no real plan to carry out the program, Mr. Biden’s team has struggled to build a viable federal-local funding pipeline, hindered by state governments that view the initiative as a burden and the ambivalence of many landlords.As a result, the $47 billion Emergency Rental Assistance program, to date, disbursed only $3 billion — about 7 percent of what was supposed to be a crisis-averting infusion of cash.Adding to the urgency, Justice Brett M. Kavanaugh warned last month, when the Supreme Court allowed a one-month extension of the eviction moratorium to stand, that any further extensions would have to go through Congress. But there was little chance that Republicans on Capitol Hill would agree, and by the time White House officials asked, only two days remained before the freeze expired, angering Democratic leaders who said they had no time to build support for the move.“Really, we only learned about this yesterday,” said Speaker Nancy Pelosi, who had publicly and privately urged senior Biden administration officials to deal with the problem themselves.“What a devastating failure to act in a moment of crisis,” said Diane Yentel, the president of the National Low Income Housing Coalition, which had pressed for an extension of the moratorium. “As the Delta variant surges and our understanding of its dangers grow, the White House punts to Congress in the final 48 hours and the House leaves for summer break.”The federal eviction moratorium, put in place by the Centers for Disease Control and Prevention in November, was effective, reducing by about half the number of eviction cases that normally would have been filed since last fall, according to an analysis of filings by the Eviction Lab at Princeton University.Advocates have argued it is also a public health imperative, because evictions make it harder for people to socially distance.The lapse of the federal freeze is offset by other pro-tenant initiatives that are still in place. Many states and localities, including New York and California, have extended their own moratoriums, which should blunt some of the effect. In some places, judges, cognizant of the potential for a mass wave of displacement, have said they would slow-walk cases and make greater use of eviction diversion programs.On Friday, several government agencies, including the Federal Housing Finance Agency, along with the Agriculture, Housing and Urban Development and Veterans Affairs Departments, announced that they would extend their eviction moratoriums until Sept. 30.Nonetheless, there is the potential for a rush of eviction filings beginning next week — in addition to the more than 450,000 eviction cases already filed in courts in the largest cities and states since the pandemic began in March 2020.An estimated 11 million adult renters are considered seriously delinquent on their rent payment, according to a survey by the Census Bureau, but no one knows how many renters are in danger of being evicted in the near future.Bailey Bortolin, a tenants’ lawyer who works for the Nevada Coalition of Legal Service Providers, said the absence of the moratorium would lead many owners to dump their backlog of eviction cases into the courts next week, prompting many renters who received an eviction notice to simply vacate their apartments rather than fight it out.“I think what we will see on Monday is a drastic increase in eviction notices going out to people, and the vast majority won’t go through the court process,” Ms. Bortolin said.The moratorium had been set to expire on June 30, but the White House and C.D.C., under pressure from tenants groups, extended the freeze until July 31, in the hopes of using the time to accelerate the flow of rental assistance.A crash effort followed, led by Gene Sperling, who was appointed in March to oversee Mr. Biden’s pandemic relief efforts, including emergency rental assistance programs created by coronavirus aid laws enacted in 2020 and 2021.Mr. Sperling, working with officials in the Treasury Department, moved to loosen application requirements and increase coordination among the state governments, legal aid lawyers, housing court officials and local nonprofits with expertise in mediating landlord-tenant disputes.In June, 290,000 tenants received $1.5 billion in pandemic relief, according to Treasury Department statistics released last week. To date, about 600,000 tenants have been helped under the program.But administration officials concede the improvements have not progressed quickly enough. Over the past week, Mr. Sperling; Brian Deese, the director of the National Economic Council; Susan Rice, Mr. Biden’s top domestic policy adviser; and Ms. Rice’s deputy on housing policy, Erika C. Poethig, made a late plea for Mr. Biden to extend the freeze, according to two people familiar with the situation who spoke on the condition of anonymity to describe internal deliberations.Dana Remus, the White House counsel, expressed concerns that an extension was not a legally available option, and other officials suggested it could prompt the Supreme Court to strike down the administration’s broad use of public health laws to justify a range of federal policies, and their view prevailed, the officials said.In a statement Friday evening, Mr. Biden sought to put the onus on local officials to provide housing aid, saying “there can be no excuse for any state or locality not accelerating funds to landlords and tenants.”“Every state and local government must get these funds out to ensure we prevent every eviction we can,” he added.In the past week, Wally Adeyemo, the deputy Treasury secretary overseeing the program, had sent letters to officials in several localities, including New York, warning that their share of the cash could be taken back if it was not spent by mid-September, according to two senior administration officials. The White House is especially concerned about the sluggish pace of spending in Florida.Emily A. Benfer, a professor at Wake Forest University who specializes in health and housing law, said it was not entirely fair to blame the states, because many local governments had to build their rental assistance programs from scratch.It has also been difficult to gain buy-in from landlords, who are required to fill out complex financial forms and follow strict eligibility rules. Some simply do not want to, especially if they have more informal arrangements with tenants. In addition, many landlords and tenants do not even know the aid program exists.Big and small landlords are nearly unanimous in their disdain for the C.D.C.’s moratorium and the patchwork of state and local moratoriums that have augmented it.“They just said ‘You cannot evict and that’s it,’” said Shaker Viswanathan, 65, who owns 16 units in San Diego. “The tenants are the ones that they are trying to take care of, and not anybody else. We still have to make mortgage payments.”If there is one point both tenants and landlords agree on, it is that gaining access to the money remains difficult, and the process must be streamlined.“These applications are just a bear,” said Zach Neumann, a lawyer who runs the Covid-19 Eviction Defense Project in Denver, which has received dozens of calls and emails from renters panicked by the end of the freeze. “It adds a ton of time onto the process and that increases the risk for tenants.”Evictions can be personal crises for all involved — so traumatic, in fact, that many tenants will often leave without resisting just to avoid the ordeal, according to marshals and sheriffs responsible for showing up at people’s doors, hauling out their belongings and locking them out.Kristen Randall, a constable who oversees evictions in the Tucson area, has been reaching out to people on both sides to figure out what happens next.It is a mixed, cloudy picture. Some landlords who are waiting for tenants to get rental assistance are in no rush to evict. Others are planning to take legal action next week to enforce judgments against tenants they have already taken to court.Ms. Randall spent part of Friday visiting renters who faced imminent eviction.“It has been an emotional day,” she said.Ms. Randall repeated what she has been telling those tenants: “When you leave on your own, it is better than me showing up and locking you out.”Ron Lieber More

  • 113 Shares99 Views

    in Economy

    Federal Unemployment Aid Is Now a Political Lightning Rod

    by

    Republican-led states are cutting off relief months ahead of schedule, citing openings aplenty. Some jobless workers face hardships and tough choices.Of the more than four million people whose jobless benefits are going to be cut off in the next few weeks, Bre Starr will be among the first.That’s because Ms. Starr — a 34-year-old pizza delivery driver who has been out of work for more than a year — lives in Iowa, where the governor has decided to withdraw from all federal pandemic-related jobless assistance next Saturday.Iowa is one of 25 states, all led by Republicans, that have recently decided to halt some or all emergency benefits months ahead of schedule. With a Labor Department report on Friday showing that job growth fell below expectations for the second month in a row, Republicans stepped up their argument that pandemic jobless relief is hindering the recovery.The assistance, renewed in March and funded through Sept. 6, doesn’t cost the states anything. But business owners and managers have argued that the income, which enabled people to pay rent and stock refrigerators when much of the economy shut down, is now dissuading them from applying for jobs.“Now that our businesses and schools have reopened, these payments are discouraging people from returning to work,” Gov. Kim Reynolds of Iowa said in announcing the cutoff. “We have more jobs available than unemployed people.”While the governor complains that people aren’t returning to work soon enough, however, some Iowans respond that they are being forced to return too soon.“I’m a Type 1 diabetic, so it’s really important for me to stay safe from getting Covid,” Ms. Starr said, explaining that she was more prone to infection. “I know that for myself and other people who are high risk, we cannot risk going back into the work force until everything is good again.”But just what does “good again” mean?Covid-19 cases have been declining in Iowa as they have throughout the country, and deaths are at their lowest levels since last summer. State restrictions were lifted in February, businesses are reopening, and Iowa’s unemployment rate was 3.8 percent in April, the latest period for which state figures are available — much lower than the national 6.1 percent that month. (Unemployment rates in the 25 states that are cutting off benefits ranged from 2.8 percent to 6.7 percent.)Still, an average of 15,000 new cases and more than 400 related deaths are being reported daily across the country, and barely 40 percent of the population has been fully vaccinated.Most economists say there is no clear, single explanation yet for the difficulty that some employers are having in hiring. Government relief may play a role in some cases, but so could a lack of child care, continuing fears about infection, paltry wages, difficult working conditions and normal delays associated with reopening a mammoth economy.The particular complaints that government benefits are sapping the desire to work have, nonetheless, struck a chord among Republican political leaders.In Ms. Starr’s case, Ms. Reynolds’s move to end federal jobless relief in Iowa is likely to have its intended effect.Ms. Starr can be counted among the long-term unemployed. She has relied on a mix of pandemic-related benefits since last spring, when she left her job as a delivery driver for Domino’s Pizza after co-workers started getting ill.She could probably have already gotten her job back; Domino’s in Des Moines is advertising for drivers. But Ms. Starr has been reluctant to apply.“A lot of people in Iowa don’t wear masks — they think that Covid is fake,” said Ms. Starr, who worries not only about her own susceptibility to infection but also about the health of her 71-year-old father, whom she helps care for: He has emphysema, diabetes and heart troubles.An early withdrawal from the federal government’s network of jobless relief programs affects everyone in the state who collects unemployment insurance. Ms. Starr, like all recipients, will lose a weekly $300 federal stipend that was designed to supplement jobless benefits, which generally replace a fraction of someone’s previous wage. In most of the states, the decision will also end Pandemic Unemployment Assistance, which covers freelancers, part-timers and self-employed workers who are not normally eligible for unemployment insurance. And it will halt Pandemic Emergency Unemployment Compensation, which continues paying people who have exhausted their regular allotment.In addition to the $300 supplement, Ms. Starr gets $172 a week in Pandemic Unemployment Assistance. The total is about $230 less than she earned at her previous job. The government checks pay for her rent, food and some of her father’s medicine, she said.Ms. Starr, who is vaccinated, said the governor’s order would probably force her to go back to work despite her health fears. She is thinking about some kind of customer service job from her home, although that would require her to buy a laptop and maybe get landline telephone service, she said. Absent that, she said, she may have to take another delivery job or work in an office.Whether her case is evidence that ending jobless benefits early makes sense depends on one’s perspective.A brewery in Phoenix. As local economies flicker back to life, federal emergency benefits have prompted a debate over whether pandemic jobless relief is helping or hindering the recovery.Juan Arredondo for The New York TimesIn many cases, the problem is not that people don’t want to work, said Jesse Rothstein, a professor of public policy and economics at the University of California, Berkeley. Rather, benefits give the jobless more options, he said, like an ability “to say no to things that maybe aren’t safe or aren’t good fits.”Mr. Rothstein, though, cautioned against drawing broad conclusions.“The reopening happened really quickly,” he said. As a result, he said, it’s not surprising that there is friction in ramping up and hiring that could be unrelated to benefits. “It may just be that it takes a few weeks to reopen,” he added. “Some of the trouble employers are having in finding workers is that they all tried to find them the same day.”At the online job site Indeed, job searches in states that announced an early end to federal unemployment benefits picked up relative to the national trend. But the increase was modest — about 5 percent — and vanished a week later, said Jed Kolko, the chief economist for Indeed. And low-wage jobs weren’t the only ones to attract more responses; so did finance positions and openings for doctors.Aside from any discussion about the impact of jobless benefits on the labor market, economists have warned of long-lasting scars inflicted on the economy by the pandemic.“It’s important to remember we are not going back to the same economy,” the Federal Reserve chair, Jerome H. Powell, has said. “This will be a different economy.”“The real concern,” he said, “is that longer-term unemployment can allow people’s skills to atrophy, their connections to the labor market to dwindle, and they have a hard time getting back to work.”Roughly 41 percent of the nation’s 9.3 million unemployed fall into the long-term category, defined as more than 26 weeks. About 28 percent of the total have been unemployed for more than a year.Historically, this group, which is disproportionately made up of Black and older Americans, has had a tougher time getting hired. That pattern was likely to be repeated even in the unusual circumstances caused by the pandemic, said Carl Van Horn, the founding director of the Heldrich Center for Workforce Development at Rutgers University.Employers tend to take a negative view of people who have been out of work for an extended period or have gaps in their résumés, regardless of the reasons, Mr. Van Horn said.“Employers always complain about not being able to find the job seeker they want at that moment at the price they are willing to pay, whether it’s the best economy in 50 years or a terrible economy,” he said.The problem with prematurely ending jobless benefits, he said, is that “such a broad brush policy also punishes people who are also desperately looking for work.”That’s the situation that Amy Cabrera says she faces in Arizona. Since she was furloughed last summer, Ms. Cabrera, 45, has been living off about $500 a week in unemployment benefits, after taxes — roughly half the $50,000 salary in her previous job conducting audits in the meetings and events department at American Express.To make ends meet, she has given up the lease on her car and sublet a room in the house she rents in the San Tan Valley, southeast of Phoenix. “I’m paying for my food — whatever I need to survive — and that’s it,” she said, as she sat in the used 2006 Jeep she bought so she would not be carless. Food stamps are helping pay for her meals.But Ms. Cabrera rejected the idea that there were plenty of jobs to be had in Arizona, where the governor has moved to end the $300 federal supplement on July 10. Many positions she is qualified for, including executive administration and office management jobs, are paying $15 an hour, she said, far from enough to pay her $1,550 monthly rent and part of her son’s college tuition. Jobs in Phoenix or Tempe would require her to commute nearly two hours each way during rush hour. And because of a bad back, she can’t have a job that would require her to spend time on her feet.“I have desperately been looking for work,” Ms. Cabrera said. Still, of the roughly 100 jobs she estimated she had applied for, she has had only one interview.She said she didn’t know how she would live on her remaining unemployment benefits — $214 a week after taxes — when she loses the $300 supplement.“I really don’t have an answer for that yet,” she said. “I’ve really just been trying to roll with the punches.” More

  • 63 Shares129 Views

    in Economy

    Unemployment claims fell last week.

    by

    New claims for unemployment benefits fell last week, the government reported on Thursday, as the labor market slowly recovers from the staggering losses wreaked by the coronavirus pandemic.About 487,000 workers filed first-time claims for state benefits during the week that ended May 8, the Labor Department said, a decrease from 514,000 the week before. In addition, about 104,000 new claims were filed for Pandemic Unemployment Assistance, a federal program covering freelancers, part-timers and others who do not routinely qualify for state benefits.Neither figure is seasonally adjusted. On a seasonally adjusted basis, new state claims totaled 473,000.After more than a year of being whipsawed by the pandemic, the economy has been showing new life. Restrictions are lifting, businesses are reopening and job listings are on the upswing. But hiring in April was weaker than expected.Some employers, particularly in the restaurant and hospitality sectors, have complained of having trouble finding workers. The U.S. Chamber of Commerce and several Republican governors have asserted that a temporary $300-a-week federal unemployment supplement has made workers reluctant to return to the job.The U.S. Labor Department said that as of Wednesday, six states — Iowa, Mississippi, Missouri, Montana, North Dakota and South Carolina — had notified the department that they were terminating federal pandemic-related unemployment benefits next month.The unemployment rates in those states in March, the latest month for which data is available, ranged from 3.7 percent in Iowa to 6.3 percent in Mississippi.Several other states with Republican governors, including Tennessee, Arkansas, Alabama, Wyoming and Idaho, have said they also plan to withdraw from the federal program. Tennessee and Alabama are among the states that offer the lowest maximum benefit to qualified individuals each week.But economists are skeptical that jobless benefits are playing anything more than a bit part in the pace of the job market’s recovery.“There is tremendous churn in this labor market,” said Gregory Daco, chief U.S. economist at Oxford Economics. “There are still major supply constraints and unemployment benefits are not the most important one. The virus is.”Many workers have children at home who are not attending school in person. Others are wary of returning to jobs that require face-to-face encounters. Covid-19 infections have decreased since September but there are still 38,000 new cases being reported each day and 600 Covid-related deaths. Less than half the population is fully vaccinated.There is halting progress from employers as well, as businesses continually update their assessment of costs and customer demand. “The hiring pattern isn’t going to be smooth,” Mr. Daco said. “Businesses hire and then reassess. They need to find the right balance, it’s a trial and error process more than anything.”Federal jobless benefits are due to expire in September. Prematurely halting them is “detrimental to the economy,” Mr. Daco said. “You’re voluntarily hurting certain vulnerable tranches of the population.”Nationwide, the unemployment rate was 6.1 percent, and there are 8.2 million fewer jobs than in February 2020. More

  • 125 Shares119 Views

    in Economy

    As Trillions Flow Out the Door, Stimulus Oversight Faces Challenges

    by

    A sprawling system meant to police trillions of dollars is showing signs of strain as watchdogs warn of waste, fraud and abuse.WASHINGTON — Lawmakers have unleashed more than $5 trillion in relief aid over the past year to help businesses and individuals through the pandemic downturn. But the scale of that effort is placing serious strain on a patchwork oversight network created to ferret out waste and fraud. More

  • 125 Shares99 Views

    in Economy

    Federal Aid to Renters Moves Slowly, Leaving Many at Risk

    by

    Congress allocated $25 billion in December and another $21 billion in March to help people who fell behind on rent during the pandemic. Little has reached landlords or tenants.WASHINGTON — Four months after Congress approved tens of billions of dollars in emergency rental aid, only a small portion has reached landlords and tenants, and in many places it is impossible even to file an application.The program requires hundreds of state and local governments to devise and carry out their own plans, and some have been slow to begin. But the pace is hindered mostly by the sheer complexity of the task: starting a huge pop-up program that reaches millions of tenants, verifies their debts and wins over landlords whose interests are not always the same as their renters’.The money at stake is vast. Congress approved $25 billion in December and added more than $20 billion in March. The sum the federal government now has for emergency rental aid, $46.5 billion, rivals the annual budget of the Department of Housing and Urban Development.Experts say careful preparation may improve results; it takes time to find the neediest tenants and ensure payment accuracy. But with 1 in 7 renters reporting that they are behind on payments, the longer it takes to distribute the money, the more landlords suffer destabilizing losses, and tenants risk eviction.Millions of tenants are protected from eviction only by a tenuous federal moratorium that faces multiple court challenges, omits many households and is scheduled to expire in June.“I’m impressed with the amount of work that unsung public servants are doing to set up these programs, but it is problematic that more money isn’t getting out the door,” said Ingrid Gould Ellen, a professor at New York University who is studying the effort. “There are downstream effects if small landlords can’t keep up their buildings, and you want to reach families when they first hit a crisis so their problems don’t compound.”Estimates of unpaid rents vary greatly, from $8 billion to $53 billion, with the sums that Congress has approved at the high end of the range.The situation illustrates the patchwork nature of the American safety net. Food, cash, health care and other types of aid flow through separate programs. Each has its own mix of federal, state and local control, leading to great geographic variation.While some pandemic aid has flowed through established programs, the rental help is both decentralized and new, making the variation especially pronounced.While Charleston has started a local rent assistance program, South Carolina has $272 million to spend and has not begun taking applications.Cameron Pollack for The New York TimesAmong those seeking help is Saundra Broughton, 48, a logistics worker outside Charleston, S.C., who considered herself safely middle class in the fall, when she rented an apartment with a fitness center and saltwater pool. To her shock, she was soon laid off; after her jobless benefits were delayed, she received an eviction notice.“I’ve always worked and taken care of myself,” she said. “I’ve never been on public assistance.”A judge gave Ms. Broughton 10 days to leave her apartment. Only a last-minute call to legal aid brought word of the federal moratorium, which requires tenants to apply. She rushed to the library to print the form with 24 hours to spare. “But I still owe the money,” she said, about $4,600 and counting.If Ms. Broughton lived in nearby Berkeley County, she could have sought help as early as March 29. In Charleston County, a few miles away, she could have applied on April 12. But as a resident of Dorchester County, she must apply through the state, which has $272 million in federal money but is not yet taking applications.“Why are they holding the money?” she said. “I have thousands of dollars of debt and could be kicked out at any moment. It’s a very frightening feeling.”The huge aid measures passed during the early stages of the pandemic did not include specific provisions to help renters, though they did give most households cash. But hundreds of state and local governments started programs with discretionary money from the CARES Act, passed in March 2020. These efforts disbursed $4.5 billion in what amounted to a practice run for the effort now underway with 10 times the money.Lessons cited include the need to reach out to the poorest tenants to let them know aid is available. Technology often posed barriers: Renters had to apply online, and many lacked computers or internet access.The demand for documentation also thwarted aid, as many people without proof of leases or lost income could not finish applications. Some landlords declined to participate, perhaps preferring to seek new tenants.Despite rising need, programs in Florida and New York, financed by the CARES Act, returned tens of millions of unspent dollars to the states. By the time Congress passed the new program in December, nearly 1 renter household in 5 reported being behind on payments.The national effort, the Emergency Rental Assistance Program, is run by the Treasury Department. It allocates money to states and also to cities and counties with populations of at least 200,000 that want to run their own programs. About 110 cities and 227 counties have chosen to do so.The program offers up to 12 months of rent and utilities to low-income tenants economically harmed by the pandemic, with priority on households with less than half the area’s median income — typically about $34,000 a year. Federal law does not deny the aid to undocumented immigrants, though a few states and counties do.Modern assistance seems to demand a mix of Jacob Riis and Bill Gates — outreach to the marginalized and help with software. Progress slowed for a month when the Biden administration canceled guidance issued under President Donald J. Trump and developed rules that require less documentation.Other reasons for slow starts vary. Progressive state legislators in New York spent months debating the best way to protect the neediest tenants. Conservatives legislators in South Carolina were less focused on the issue. But the result was largely the same: Neither legislature passed its program until April, and neither state is yet accepting applications.“I just don’t know why there hasn’t been more of a sense of urgency,” said Sue Berkowitz, the director of the South Carolina Appleseed Legal Justice Center. “We’ve been hearing nonstop from people worried about eviction.”There is no complete data on how many tenants have been helped. But of the $17.6 billion awarded to state governments, 20 percent is going to states not yet taking applications, though some local programs in those states are. Florida (which has $871 million), Illinois ($566 million) and North Carolina ($547 million) are among those that have yet to start.“The pace is slow,” said Greg Brown of the National Apartment Association, who emphasized that landlords have mortgages, taxes and maintenance to pay.In a recent talk at the Brookings Institution, Erika Poethig, a housing expert on the White House Domestic Policy Council, praised the “unprecedented amount of rental assistance” and said “the federal government only has so much ability” to encourage faster action.Accepting applications is only the beginning. With $1.5 billion to spend, California has attracted 150,000 requests for help. But of the $355 million requested, only $20 million has been approved and $1 million paid.Texas, with $1.3 billion to spend, started quickly, but the company it hired to run the program had software failures and staffing shortages. A committee in the state House of Representatives found that after 45 days, the program had paid just 250 households.By contrast, a program jointly run by the city of Houston and Harris County had spent about a quarter of its money and assisted nearly 10,000 households.Not everyone is troubled by the pace. “Getting the money out fast isn’t necessarily the goal here, especially when we focus on making sure the money reaches the most vulnerable people,” said Diane Yentel, the director of the National Low Income Housing Coalition.Given the challenge, she said, “I think it’s going OK.”She points toward a program in Santa Clara County, Calif., that won praise for its outreach last year. Many of the people it served spoke little English or lacked formal leases to submit. Now, with $36 million to spend under the new program, it opted for weeks of additional planning to train 50 nonprofit groups to find the poorest households“Giving away money is actually quite hard,” said Jen Loving, who runs Destination: Home, a housing group leading the campaign. “All the money in the world isn’t going matter if it doesn’t get to the people who need it.”In Charleston, S.C., housing became a subject of concern after a 2018 study found the area had the country’s highest eviction rate. Charleston County ran three rounds of rental relief with CARES Act money, and the state ran two.The second state program, started with $25 million in February, drew so many applications that it closed in six days. But South Carolina is still processing those requests as it decides how to distribute the new federal funds.Antonette Worke is among the applicants awaiting an answer. She moved to Charleston from Denver last year, drawn by cheaper rents, warmer weather and a job offer. But the job fell through, and her landlord filed for eviction.Ms. Worke, who has kidney and liver disease, is temporarily protected by the federal eviction moratorium. But it does not cover tenants whose leases expire, as hers will at the end of next month. Her landlord said he would force her to move, even if the state paid the $5,000 in overdue rent.Ms. Worke is temporarily protected by a federal moratorium on evictions, but her lease is set to expire at the end of the month.Nora Williams for The New York TimesStill, she said the help was important: A clean slate would make it easier to rent a new apartment and relieve her of an impossible debt. “I’m stressing over it to the point where I’ve made myself sicker,” she said.Moving faster than the state, Charleston County started its $12 million program two weeks ago, and workers have taken computers to farmers’ markets, community centers and a mall parking lot. Christine DuRant, a deputy county administrator, said the aid was needed to prevent foreclosures that could reduce the housing stock. But critics would pounce if the program sent payments to people who do not qualify, she said: “We will be audited,” possibly three times.Latoya Green is caught where the desire for speed and accounting collide. A clerk who lost hours in the pandemic, she owes $3,700 in rent and utilities and is protected by the eviction moratorium only until her lease expires next month.She applied for help on the day the county program started but has not completed the application. She said she is unsettled by the emails requesting her lease, which she lacks, and proof of lost income.Still, Ms. Green does not criticize Charleston County officials. “I think they’re trying their best,” she said. “A lot of people run scams.”With time running short, she added: “I just hope and pray to God they’ll be able to assist me.” More

  • 100 Shares179 Views

    in Economy

    Biden's Spending Plans Could Start to Tackle Inequality

    by

    The Biden administration is relying on Congress instead of just the Fed to fix the economy. That mix could lead to a less wealth-unequal future.The coronavirus pandemic has threatened to rapidly expand yawning gaps between the rich and the poor, throwing lower-earning service workers out of jobs, costing them income, and limiting their ability to build wealth. But by betting on big government spending to pull the economy back from the brink, United States policymakers could limit that fallout.The $1.9 trillion economic aid package President Biden signed into law last month includes a wide range of programs with the potential to help poor and middle-class Americans to supplement lost income and save money. That includes monthly payments to parents, relief for renters and help with student loans.Now, the administration is rolling out additional plans that would go even further, including a $2.3 trillion infrastructure package and about $1.5 trillion in spending and tax credits to support the labor force by investing in child care, paid leave, universal prekindergarten and free community college. The measures are explicitly meant to help left-behind workers and communities of color who have faced systemic racism and entrenched disadvantages — and they would be funded, in part, by taxes on the rich.Forecasters predict that the government spending — even just what has been passed so far — will fuel what could be the fastest annual economic growth in a generation this year and next, as the country recovers and the economy reopens from the coronavirus pandemic. By jump-starting the economy from the bottom and middle, the response could make sure the pandemic rebound is more equitable than it would be without a proactive government response, analysts said.That is a big change from the wake of the 2007 to 2009 recession. Then, Congress and the White House passed an $800 billion stimulus bill, which many researchers have concluded did not do enough to fill the hole the recession left in economic activity. Lawmakers instead relied on the Federal Reserve’s cheap-money policies to coax the United States’ economy back from the brink. What ensued was a halting recovery marked by climbing wealth inequality as workers struggled to find jobs while the stock market soared.“Monetary policy is a very aggregated policy tool — it’s a very important economic policy tool, but it’s at a very aggregated level — whereas fiscal policy can be more targeted,” said Cecilia Rouse, who oversees the White House Council of Economic Advisers. In the pandemic crisis, which disproportionately hurt women of all races and men of color, she said, “If we tailor the relief to those who are most affected, we are going to be addressing racial and ethnic gaps.”From its first days, the pandemic set the stage for a K-shaped economy, one in which the rich worked from home without much income disruption as poorer people struggled. Workers in low-paying service jobs were far more likely to lose jobs, and among racial groups, Black people have experienced a much slower labor market rebound than their white counterparts. Globally, the downturn probably put 50 million people who otherwise would have qualified as middle class into lower income levels, based on one recent Pew Research analysis.But data suggest the U.S. policy response — including relief legislation that passed last year under the Trump administration — has helped mitigate the pain.“The CARES Act to the American Rescue Plan have helped to support more households than I would have imagined,” Charles Evans, the president of the Federal Reserve Bank of Chicago, told reporters this month during a call, referring to the pandemic relief packages passed in early 2020 and early 2021.Wealth has recovered nearly across the board after slumping early last year, foreclosures have remained low, and household consumption has been shored up by repeated stimulus checks.While the era has been fraught with uncertainty and people have slipped through the cracks, this downturn looks very different for poorer Americans than the post-financial crisis period. That recession ended in 2009, and America’s wealthiest households recovered precrisis wealth levels by 2012, while it took until 2017 for the poorest to do the same.At a food bank in Phoenix last month. The $1.9 trillion economic aid package signed into law includes a wide range of programs with the potential to help poor and middle-class Americans.Juan Arredondo for The New York TimesThe government’s policy response is driving the difference. In the 2010s, Republicans cited deficit worries and curtailed spending early, at a time when the economy remained far from healed after the worst downturn since the Great Depression. Interest rates were already near zero and not offering much of an economic lift, so the Fed engaged in several rounds of large-scale bond purchases to try to bolster the economy.The Fed policies did help. But low rates and huge bond-buying bolstered the economy slowly, and by first increasing prices on financial assets, which rich households are much more likely to own. As companies gain access to cheap capital to expand and hire, the workers who secure those new jobs have more money to spend, and a happy cycle unfolds.By 2019, that prosperous loop had kicked into gear and unemployment had dropped to half-century lows. Black and Hispanic as well as less-educated workers were working in greater numbers, and wages at the bottom of the income distribution had begun to steadily climb.Poverty fell, and there were reasons to hope that if that had continued, income inequality — the gap between how much the poor and the rich earn each year — might soon decline. Lower income inequality could, in theory, lead to lower wealth inequality over time, as households have the wherewithal to save more evenly.But getting there took nearly a decade and when the pandemic hit in 2020, it almost certainly disrupted the trend. The data are released on a lag.As those divergent trends between labor and capital played out, the rich rebuilt their savings — which are heavily invested in stocks and businesses — much faster. Poorer households eventually reaped benefits as the years wore on and people landed jobs. The bottom half of America’s wealth holders ended up better off than they had been before the crisis, but farther behind the rich.At the start of 2007, the bottom half of the wealth distribution held 2.1 percent of the nation’s riches, compared to 29.7 percent for the top 1 percent. By the start of 2020, the bottom half had 1.8 percent, while the top 1 percent held 31 percent.Researchers debate whether monetary policy actually worsens wealth divides in the long run — especially since there’s the hairy question of what would have happened had the Fed not acted — but monetary policymakers generally agree that their policies can’t stop a pre-existing trend toward ever-worse wealth inequality.By offering a more targeted boost from the very start of the recovery, fiscal policy can. Or, at a minimum, it can prevent wealth gaps from deepening so much.Monetary policy “is naturally trickle-down,” said Joseph Stiglitz, an economist at Columbia and Nobel laureate. “Fiscal policy can work from the bottom and middle up.”That’s what the Biden administration is gambling on. Paired with packages from December and last April, Congress’s recent package will bring the amount of economic relief that Congress has approved during the pandemic to more than $5 trillion. That dwarfs the amount spent in the last recovery.The legislation is a mosaic of tax credits, stimulus checks and small-business support that could leave families at the lower end of the income and savings distribution with more money in the bank and, if its provisions work as advertised, with a better chance of returning to work early in the recovery.There is no guarantee Mr. Biden’s broader economic proposals, totaling about $4 trillion, will clear a narrowly divided Congress. Republicans have balked at his plans and this week offered a counterproposal on infrastructure that is only a fraction the size of what Mr. Biden wants to spend. A bipartisan group of House moderates is pushing the president to finance infrastructure spending through an increased gas tax or something similar, which hits the poor harder than the rich.Still, the president’s new proposals could have long-term effects, working to retool workers’ skills and lift communities of color in hopes of putting the economy on more equal footing. The president is set to outline his so-called American Family Plan, which is focused on the work force, before his first address to a joint session of Congress next week.While details have yet to be finished, programs like universal prekindergarten, expanded subsidies for child care and a national paid leave program would be paid for partly by raising taxes on investors and rich Americans. That could also affect the wealth distribution, shuffling savings from the rich to the poor.The plan, which must win support in a Congress where Democrats have just a narrow margin, would raise the top marginal income tax rate to 39.6 percent from 37 percent, and raise taxes on capital gains — the proceeds of selling an asset, like a stock — for people making more than $1 million to 39.6 percent from 20 percent. Counting in an Obamacare-related tax, the taxes they pay on profits would rise above 43 percent.If the Biden package helps a wide swath of people to get back to earning and saving money faster this time, there’s hope that it might set the economy on a different trajectory.Jim Wilson/The New York TimesThe new policies will not necessarily cut wealth inequality, which has been on an inexorable upward march for decades, but they could keep poorer households from falling behind by as much as they would have otherwise.Betting big on fiscal policy to return the economy to strength is a gamble. If the economy overheats, as some prominent economists have warned it could, the Fed might have to rapidly lift interest rates to cool things down. Rapid adjustments have historically caused recessions, which consistently throw vulnerable groups out of jobs first.But administration officials have repeatedly said the bigger risk is underdoing it, leaving millions on the labor market’s sidelines to struggle through another tepid recovery. And they say the spending provisions in both the rescue package and the infrastructure could help to fix longstanding divides along racial and gender lines.“We think of investment in racial equity, and equity in general, as good policy, period, and integral to all the work we do,” Catherine Lhamon, a deputy director of the Domestic Policy Council, said in an interview. More