Back to school is underway (kind of) and the leaves are starting to flash some fall color. Before you know it we’ll blow through Halloween and barrel headlong toward Thanksgiving and Christmakwanzakah.
Of course, the tack of the coronavirus pandemic will determine just how happy the holidays are. A big unknown is how much time we’ll be able to spend with family and friends outside our COVID bubbles with the virus lurking in the epidemiological shadows.
But there’s also this: Will we be in any mood for celebrating if unemployment persists at record levels?
The nearly 850,000 people subsisting on unemployment aid in Massachusetts are about to see their weekly checks slashed by anywhere from 25 percent to 50 percent or more, the second cut since the end of July. Worse, without another massive financial rescue package from Washington — and the prospects don’t look good — their jobless benefits will begin running out completely in December.
More on that merry scenario in a moment.
On Friday, we’ll get an update on the local job market with the Labor Department’s state-by-state report on employment conditions in August.
As of July, the Massachusetts jobless rate was 16.1 percent, down from a peak of 17.7 percent in June but still the highest in the nation. The pace of hiring slowed during the month.
Those trends probably continued here last month, based on the already released national jobs report for August. Hiring across the country was better than analysts had forecast, but employment growth cooled for the second straight month. The US jobless rate fell to 8.4 percent from 10.2 percent in July.
It’s crucial that Massachusetts employers are confident enough to put more people back to work. That would blunt the impact of the loss of billions of dollars in extra federal jobless benefits that helped prop up the economy during the coronavirus shutdown and Governor Charlie Baker’s cautious reopening.
As my colleague Shirley Leung and I explained on Sunday, that confidence hinges on our success in containing the coronavirus and returning to more normal work and social routines. Sticking close to home, people are buying less and saving more, especially those in affluent households. Businesses are reluctant to hire until their sales pick up.
Which means that the loss of enhanced federal jobless benefits comes at a vulnerable time.
Late last Friday afternoon, the Baker administration said the federal money sweetening Massachusetts unemployment checks by $300 a week had run out.
The press release from the state Department of Unemployment Assistance said the last of six weekly bonuses — funded with $44 billion diverted from the Federal Emergency Management Agency to state unemployment programs around the country — was on its way to eligible recipients.
“FEMA has informed DUA that no additional . . . payments will be available beyond the 6 weeks already allotted,” the Department of Unemployment Assistance advised.
Read: “Don’t blame the governor when you can’t pay the bills.”
It was the second time in seven weeks that Congress stood by as supplemental jobless benefits expired, even though a record number of Americans were out of work because of the pandemic. A $600-a-week payout disappeared at the end of July after Senate Republicans blocked a bill that would have extended the payments as part of a $3 trillion financial rescue package. The GOP wants a much smaller relief package.
President Trump tapped a FEMA disaster relief fund for money to cover the $300 weekly bonus. It was a short-term fix, but better than nothing. Massachusetts recipients got $1.8 billion they otherwise would not have seen.
“Unemployed workers facing large cuts to their benefits will face unsustainable credit card debt at best, and food insecurity, housing instability, unmet medical needs, and more at worst,” said Indi Dutta-Gupta,co-executive director of the Georgetown Center on Poverty and Inequality.
Basic unemployment checks will continue as they always have ― at the level calculated by the state for each individual applicant based on past income. The average payment in July was $400 a week, down from $525 a week in January as more lower-income workers lost their jobs.
Some employers have argued that Massachusetts' relatively generous payouts — the maximum weekly benefit is $825, the highest in the country — along with the now-ended federal bonuses, discouraged people from returning to work because they could make more money on unemployment. A study done by economists Simon Mongey of the University of Chicago and Corina Boar of New York University found that about 68 percent of workers who lost their jobs due to the COVID-19 pandemic received benefits that exceeded their previous wages.
But Mongey and Boar concluded, as have other studies, that despite the extra $600 in federal aid, most laid-off workers preferred to have a job.
In Massachusetts, benefits under state unemployment insurance are currently capped at 26 weeks. More than 387,000 people received state benefits in the first week of September.
Jobless claims began to surge in the third week of March, and for laid-off workers who applied back then, state payments will start running out at the end of next week.
However, a federal program set up by Congress, called Pandemic Emergency Unemployment Compensation, provides 13 additional weeks of benefits. The last payments available under this program are set for the week ending Dec. 26, even if recipients haven’t gotten all 13 weeks.
Once those checks end, there is a final extension. In periods of high unemployment in Massachusetts, another 13 weeks of benefits are available. For workers laid off in the awful weeks of March and April, the extended benefits will begin to run out at the end of March 2021.
A larger group of people are receiving Pandemic Unemployment Assistance, or PUA, a program established by Congress during the COVID outbreak to provide aid to those who typically didn’t qualify for state unemployment insurance. About 460,000 gig workers, independent contractors, and others in Massachusetts received PUA benefits for the week ended Aug. 22.
The state began approving PUA claims at the end of April, but payments were retroactive for people put out of work as early as the last week of January.
PUA provides up to 46 weeks of coverage, but payments also will end Dec. 26 regardless of when recipients began collecting.
“I am extremely worried that everything is set to end at the end of December, when I don’t see a lame-duck Congress and possible lame-duck administration being any more willing to negotiate than they are now,” said Michele Evermore, senior researcher and policy analyst at the National Employment Law Project in Washington, D.C. “That could mean another stalemate and people running out of benefits during the holidays.”
There are really just two ways to avoid this train wreck.
Either the economy recovers at an astonishing rate, putting a lot more people back to work, or Republicans come to their senses and agree to a rescue bill that’s large enough to make a difference.
Which Christmas miracle do you want to bet on?