One Month Into Emergency Unemployment Cutoff: Economic pain builds for workers and families, economy teetering on brink
September 1, 2020
Economists call impact of government support cutoff “devastating,” and Trump’s weak executive orders “too little, too late”
Washington, DC – Today, Groundwork Collaborative released the following statement and background calling on Congress to move quickly to reinstate emergency unemployment benefits following a full month of gridlock and delay that has hurt workers, families, and the overall economy.
“Not only is it unconscionable that the Trump administration cut the incomes of 30 million unemployed workers during a pandemic and eliminated key lifelines and support for families across the country, but over the past month we’ve seen the impact of his inaction ripple through the already-fragile economy and make this crisis so much worse than it needed to be,” said Michael Linden, Executive Director of Groundwork Collaborative.
“One month into this fiasco Congress and the Trump administration face a clear choice: Restore the incomes of 30 million workers and protect them, their families, and the economy – or accept the blame for an economic recession that is threatening to spiral into a completely avoidable full-blown depression.”
Background: One month into a completely unnecessary crisis
How we got here: Trump and his allies delayed acting for months and then pushed the country over the cliff.
A number of provisions were included in the CARES Act under the assumption that the United States would adequately address the COVID-19 public health crisis in time to taper off these relief measures by mid-summer. That turned out to be wrong. The pandemic ended up getting far worse – but Congress still hasn’t adjusted to continue their response. Here’s what happened:
- Once it became abundantly clear that it made no sense to tie these critical lifelines for workers and families to arbitrary and woefully premature expiration dates, the House passed legislation—nearly four months ago—that protects the incomes of 30 million Americans who lost their job during this pandemic; extends eviction moratoriums and other key family protections; invests in public health and COVID-19 response efforts; and gives states the resources they need to avoid job-destroying budget cuts
- For the last four months, the Trump administration and Senate Republicans have been stalling on the HEROES Act while conservative-led attempts to “reopen the economy” across the country have made the public health & economic crises much, much worse.
- After the House passed the HEROES Act, McConnell vowed to end the expanded unemployment benefits, telling House Republicans that it “will not be in the next bill” and that he was “comfortable waiting to see how the nearly $3 trillion in coronavirus spending previously approved plays out before moving forward on the next relief legislation.”
- Just two weeks before the deadline, “McConnell said he will begin ‘socializing’ the GOP’s next rescue package and start the legislative process with Democrats. He said during an event in Corbin, Ky., Monday he expects that a bill will come together ‘sometime within the next three weeks, beginning next week.’” At the same time, a Trump advisor said “The single most important thing we have to do going forward is stop the $600 a week [unemployment] payment.”
- One week before the deadline, Republicans still couldn’t get their act together on a proposal, with McConnell saying, “The administration has requested additional time to review the fine details, but we will be laying down this proposal early next week.”
- And even now Trump’s economic advisors aren’t seeing the urgency, and are even saying that they think the economy may be able to “scrape by without another relief package.”
Trump and his allies are wrong: The economic pain is real and it’s only going to get worse
Last Thursday we learned that another 1.4 million workers filed for unemployment in Trump’s economy – bringing the total to nearly 60 million over the last 23 weeks – as Trump and his allies continue blocking additional support for workers and families.
Here is some additional background from recent coverage.
The impact on people and families:
- WaPo: Congress left town and let jobless benefits lapse. Unemployed Americans say they won’t forget it: …Shawn Gabriel, a single father of two in Parma, Ohio, has learned what it means to struggle since he lost his construction job in March…his family is living off of $189 a week that he gets in unemployment benefits, which is not enough to cover his $950 rent, let alone food, electric, Internet and other expenses…the bulk of his frustration has been reserved for one place: Congress, whose members left town in August after letting the $600-a-week unemployment bonus that millions of people like Gabriel have been relying on expire…Gabriel scrambled to scratch together his rent as well as the $35 late fee his landlord tacked on, but he is worried about September…Similar stories are playing out nationwide. Millions of desperate Americans, many of whom have never relied on emergency government assistance before, are flabbergasted and furious, believing they have been cut loose by a Washington political structure that doesn’t care about their predicament during the pandemic. The stock market has snapped back, but the labor market remains in really bad shape
- CNBC: Nearly 40% of cash-strapped Americans can’t last a month on savings: “A large share of Americans who lost income during the coronavirus pandemic have little in savings — leaving them with few options in a worst-case scenario. Thirty-eight percent of people who have lost a job or had their income reduced due to Covid-19 couldn’t last more than a month off of savings of any kind, according to a bi-monthly survey published by SimplyWise, a technology company that helps people make Social Security decisions. More alarming still, about 1 in 5 people couldn’t last more than two weeks off of their savings, such as an emergency stash or money earmarked for retirement, the company found. The statistics are a sobering reminder that many Americans are teetering on the edge of financial ruin, at a time when millions of workers remain unemployed, the economy limps along and the coronavirus pandemic rages on
- Washington Post: Debt, Eviction And Hunger: Millions Fall Back Into Crisis As Stimulus And Safety Nets Vanish: One of the most successful elements of the government’s response to the coronavirus recession — protecting people on the margins from falling into poverty — is faltering as the safety net shrinks and federal benefits expire. Major recessions are especially fraught for low-income earners, whose finances can veer from tenuous to dire with one missed paycheck…If the unemployment rate stays around 10 percent and no new stimulus is delivered, “we can expect poverty rates to rise and climb higher than those observed in the Great Recession,” Parolin said
- NYT: Why Black Workers Will Hurt the Most if Congress Doesn’t Extend Jobless Benefits: …with the $600 payments expired as of the end of July and with congressional leaders and the White House debating whether to extend them, Black workers stand to be hurt the most if they fail to reach a deal. This is in large part because Black workers disproportionately live in states with the lowest benefit levels and the highest barriers to receiving them. Without the $600 federal payments, the most an unemployed worker in Florida or Alabama can receive is $275 a week. Workers still covered under the expanded gig worker categories would potentially get even less
- WSJ: New Covid-19 Layoffs Make Job Reductions Permanent: A new wave of layoffs is washing over the U.S. as several big companies reassess staffing plans and settle in for a long period of uncertainty….The outlook reflects an acceptance by corporate executives that they will have to contend with the pandemic and its economic fallout for a longer period than they had hoped
- Politico: ‘Not Just A Low-wage Recession’: White-collar Workers Feel Coronavirus Squeeze: Lower-paid workers are losing their jobs at about three times the rate of higher-wage employees. But the drop in overall employment that white-collar industries like real estate, information and professional and technology services have seen in five months is already on par with or worse than the hits they took during the Great Recession — underscoring how even highly paid workers with the ability to telework are vulnerable now. White-collar layoffs could also spark a trend of underemployment, where better-educated workers are applying for jobs below their skill level, edging out applicants who might be more suited for the position, economists say…the sluggish uptick in hiring in high-wage sectors could be a warning sign from employers who see so much uncertainty that they would rather wait and see where the economic recovery is headed before bulking up their workforce.
The impact on the economy:
- Axios: Economists foresee an unemployment “tsunami” coming: The exponential growth of claims for the Pandemic Emergency Unemployment Compensation (PEUC) program are worrying economists and previewing a weakening U.S. labor market in the coming months. “The real tsunami is coming,” Mark Zandi, chief economist at Moody’s Analytics, tells Axios. “My guess is at this point hiring in the industries that have been hit hard is going to abate.” “That leaves us with very little job creation in the rest of the economy but with still high levels of layoffs.” “I think the labor market is set to start weakening again here, particularly if Congress and the administration don’t get it together and pass more support.”…”It becomes a longer tale of recovery with more labor market friction,” says Julia Coronado, president of MacroPolicy Perspectives. “You’re starting to see unemployment spells last a long time. The longer you’re out of the labor force and disconnected from your prior employer, the harder it is to reconnect.”…The bottom line: “The recovery would be faster and more robust with the fiscal stimulus and there’s a lot more risk of a protracted, slower recovery and even some backtracking without it.
- HuffPo: Trump Raved About The Stock Market Recovery. The Actual Economy Is Faring Much Worse: …when Trump claimed in his tweet that “jobs are flowing” and that he’s building “an even greater economy than it was before,” his choice to root those claims in the success of the stock market shows he’s really only measuring the success of some of the world’s largest companies ― not the majority of American businesses, which are largely suffering under the pandemic
- Politico: Despite unemployment above 10 percent and millions of jobs vaporized, Trump is running on his economic record before the pandemic: The economy Trump and others described at the GOP convention doesn’t match up with the reality on the ground for millions of Americans, including lower-wage, blue-collar workers who will be critical to the outcome in battlegrounds such as Wisconsin, Michigan and Pennsylvania, all states the Biden campaign hopes to return to the Democratic column in November…The U.S. economy pre-coronavirus was far from the greatest in history, leaving most Americans with little cushion for the latest plunge. Now Trump, Vice President Mike Pence and other senior White House officials risk sounding out of touch cheerleading a still-struggling economy with a jobless rate over 10 percent — above its peak during the Great Recession — and close to 30 million people getting some kind of unemployment assistance
- CNN: Trump’s $300 supplemental unemployment benefit is ‘too little too late,’ Goldman Sachs says: Goldman Sachs analysts slammed President Donald Trump’s $300 supplemental unemployment benefit as “too little too late,” and warned that consumer spending may take a hit this month. In a research note, Goldman (GS) said the expiration of the $600 weekly supplement to unemployment insurance benefits at the end of July has disrupted personal income significantly in August. “Given delays in implementing the program and disbursing funds, the new program is unlikely to meaningfully support incomes until September,” analysts said…According to the research note, data suggest that unemployed individuals have already begun paring back some of their spending after the $600 federal benefit expired at the end of July
- NYT: Unemployment Claims Are ‘Stubbornly High’ as Layoffs Persist: “It’s devastating how stubbornly high initial claims are,” said Julia Pollak, a labor economist at the employment site ZipRecruiter. “There are still huge numbers of layoffs taking place.”…Other recent indicators also suggest that the recovery is faltering. Job growth slowed in July, and real-time data from private-sector sources suggests that hiring has slumped further in August. On Tuesday, American Airlines said it will furlough 19,000 workers on Oct. 1, the latest in a string of such announcements from major corporations….“It is worrying because it does signal that these large companies are pessimistic about the state of the recovery and don’t think that we are going to be returning to normal anytime soon,” said Daniel Zhao, senior economist at the career site Glassdoor…Economists warn that the loss of federal support could act as a brake on the recovery. Nancy Vanden Houten, lead economist for the forecasting firm Oxford Economics, estimated that the lapse in extra unemployment benefits would reduce household income by $45 billion in August. That could lead to a drop in consumer spending and further layoffs, she said
- Bloomberg: U.S. Consumer Confidence Hits Six-Year Low on Drag From Pandemic: U.S. consumer confidence dropped in August to the lowest since 2014 as consumers soured on employment and business conditions, indicating Americans are becoming despondent amid persistently high joblessness
- CNBC: Walmart says consumer spending dropped as stimulus checks ran ou
- NYT: Virus Alters Where People Open Their Wallets, Hinting at a Halting Recovery: …After an initial plunge in the spring, consumer habits have been slow to recover, the data shows
- Washington Post: As permanent economic damage piles up, the Covid Crisis is looking more like the Great Recession:…The devastating surge in unemployment in March and April was supposed to be temporary, as businesses shuttered to avert the greatest public health crisis in more than a century. Most workers reported they expected to be called back soon. But nearly half a year later, many of the jobs that were stuck in purgatory are being lost forever
- Bloomberg: American Air Sees 19,000 Job Cuts Once U.S. Payroll Aid Expires: …debate has stalled in Congress over a six-month extension of the government’s $25 billion in payroll support for airlines, which would carry the same restrictions on workforce cuts. A new round of assistance would avert involuntary job cuts, American said
- ABC: More than 70,000 airline jobs in jeopardy as coronavirus relief expire
- Washington Post: President Trump’s Attempt To Bypass Congress On Stimulus Is Offering Only Limited Economic Relief: …Trump’s directives have so far produced limited economic relief for Americans hurt by the coronavirus pandemic, despite promises by top White House aides that help would come within weeks.