Posted on 06/17/2021 6:57:59 AM PDT by blam
In the face of growing labor shortages, 25 states are ending federal pandemic unemployment benefits in the coming weeks. Their Republican governors argue those benefits make unemployment pay better than working, keeping workers on the sidelines of the economy. But the staggered expiration of benefits in those states over the next four weeks is just a foreshadowing of the far larger benefits cliff ahead on Labor Day. That’s when federal benefits for as many as nine million recipients will abruptly end, marking the largest benefits cliff in American history. The cliff will result directly from Democrats’ March 2021 American Rescue Plan and will disproportionately affect recipients in blue states.
The federal response to the pandemic has included unprecedented extended and expanded unemployment benefits already scheduled to total over $700 billion. While current $300-per-week bonuses have gotten outsized attention because they pay some workers more to remain unemployed, most recipients collect benefits due to two other federal pandemic programs. One extends unemployment checks to over 18 months for those exhausting state benefits. The other offers federal checks to millions who never qualified for benefits before. That latter program has seen astonishing levels of fraud and now supports more people than any other unemployment program. Except where states end them sooner, these federal benefits are scheduled to end the weekend before Labor Day.
How many people will hit the Labor Day cliff and see their federal unemployment benefits, which currently average around $600 per week, come to an abrupt end? It’s hard to know for sure because some current recipients will return to work and give up those benefits before then. But as the chart below displays, there were recently 9.2 million recipients in states where federal pandemic benefits will end on September 4, including over 8 million in states led by Democratic governors:
Federal benefit recipients potentially affected by coming state shutoffs and the Labor Day cliff
Source: Department of Labor initial claims report for June 3, 2021. “Current benefit recipients” includes continuing claims for Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) for the week ending May 15, 2021. Red reflects states with a Republican governor, and blue with a Democratic governor. States ending PUA and PEUC are: In the week ending June 12, IA, MS, MO; in the week ending June 19, AL, ID, IN, NE, NH, ND, WV, WY; in the week ending June 26, AR, GA, MT, OK, SC, SD, TX, UT; in the week ending July 3, MD, TN; and in the week ending September 4, all remaining states (including AK, AZ, FL, and OH, which are prematurely ending $300 bonuses but not PUA and PEUC).
Those 9.2 million potentially losing benefits on Labor Day are over four times the number who may lose benefits due to state shutoffs across the next four weeks. That potential Labor Day cliff is also six times bigger than the cliff when federal benefits paid after the Great Recession expired in December 2013 and 1.3 million recipients saw their benefits end.
The hard cutoff of benefits in a single week will result from a little-noticed policy change included in Democrats’ American Rescue Plan. That legislation deleted the “benefit phaseout rule” included in the bipartisan December 2020 extension law and replaced it with the coming hard cutoff on Labor Day. Such “soft phaseouts” allow those already receiving benefits to continue collecting them for a few weeks after the eligibility door has closed to new recipients. That spreads out the end of benefits, softening the blow of a program’s expiration on individuals and the local economy.
Why would policymakers trade soft phaseouts for hard cutoffs? One reason can be increased costs. But the original December 26th expiration date for these benefits reflects the likely real reason for the reversion to hard cutoffs. In the inverted thinking of some Washington policymakers, that sort of joyless timing — threatening to abruptly end temporary benefits for millions, especially the day after Christmas — creates pressure on Congress to further extend them.
The states opting out of federal benefits are now foiling that calculus. Temporary federal programs typically pay more benefits in high-unemployment states, but at least some benefits in all other states, broadening support for extensions. But the 39 Republican senators representing the 25 states now rejecting federal benefits have little cause to support another extension of benefits, both because those benefits are contributing to labor shortages and because they would be payable only in other states, especially blue ones. They and other conservatives will have the votes to block another national extension. President Biden dealt a further blow to another extension when he recently said of the $300 federal bonus “that makes sense it expires” on Labor Day.
The lawmakers who crafted the American Rescue Plan may have expected even more individuals to hit the Labor Day cliff since they couldn’t anticipate the unprecedented early shutoff of benefits in 25 states. But even with that early shutoff, record numbers will see their federal benefits abruptly end on Labor Day, with little chance of another extension. Democratic lawmakers will inevitably blame Republicans for opposing more benefits. But the real reason for the record Labor Day cliff will be Democrats’ American Rescue Plan, which applied the craven — and this time likely incorrect — Washington logic that bigger and harsher cutoffs increase the chances that “temporary” benefits continue to flow.
There are already so many homeless people in my college town it is frightening.
There is going to be an explosion of them when the evictions for non-payment of rent start.
The Government Lockdown-Caused Eviction Crisis is About to Explode
The so called cliff is only a problem if there aren’t lots of available jobs out there for people.
The expanding economy has created a four lane bridge across the chasm. Nobody should fall off the cliff, so why are some acting like there is some sort of problem here?
This thing is getting out of control and we’ll be lucky to live through it.
it won’t be forever
Riotous September.
They think they can play musical chairs forever.
It looks like like things will get exciting at the end of summer when this party ends, the hangover is going to be epic!
Read later.
And the copper wire in your new construction.
My last job, before I retired, was assisting folks at the state job office.
All I can say now, is ‘winter is coming’!
I guess that is one nice thing about owning an electric car, no catalytic converter.
When given the choice between getting up in the morning, shaving, and going to work for 8 to 10 hours, then coming home exhausted, or just waking up in the afternoon and spending 8 to 10 hours eating, drinking beer and smoking pot and cigarettes, people are a lot like apes in that they will choose the option with least effort and the most pleasure.
Rule number one of politics...
You better think really hard before you hand out a bennie because you will pay the price of hell if you ever try to take it away.
I think this week's unemployment report mirrors the consequences. The largess is going or gone. Those seeking employment just discovered there isn't a place still operational where their skills are a good fit. Back on unemployment they go...this time at the reduced level.
BTW, my company can't hire fast enough. Jobs are out there. Whenever I go out to eat at a restaurant, they are short staffed and the poor waitresses are being run ragged.
Everybody needs to get off their butts and go to work!
“Benefits Cliff”
You got to hand it to the other side - they’re great at slogans and bastardizing the language.
Watch for “Benefits Cliff” to become as dire and as ubiquitus as “climate emergency”.
All the people too lazy to get off their asses and get a job will be turned into victims - people pushed down the cliff by the “system”.
I’m done with restaurants. Went in one last Saturday, place was about half full. Was told the wait would be 30-35 minutes. I pointed to the empty tables. The uppity girl said they want to keep their staff happy.
Screw the customers, we want to keep the wait staff “happy”.
Enjoy unemployment.
Yup. From the Democrats, "here's a package that will rescue the unfortunate Americans who have fallen off the "Benefits Cliff".
Know what?
If I was out of a job right now I’d be out beating the bushes to find the best offer I could get before what should be a flood of job seekers crash the market for labor.
Duh?
Play stupid games, win stupid prizes. Life is a bitch ain’t it?
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