The Covid-19 pandemic hasn’t exactly produced a lot of good news in the last year and a half. One glaring exception has been a massive reduction of poverty in the United States — a bright spot that is dimming rapidly.
A July analysis from the Urban Institute found that the slew of federal aid Congress has allocated since March did more than just keep people afloat during the pandemic. Instead, the combination of direct stimulus funding, state-level aid and other measures managed to reduce the number of Americans living in poverty by 45 percent compared to 2018, dropping to a projected 7.7 percent this year from 13.9 percent in 2018.
Unless Democrats move quickly, though, those gains will be a statistical blip. As of Monday, 7.5 million people lost their federal pandemic unemployment benefits, according to The Century Foundation’s estimates. Millions are now leaning on a reduced unemployment check from the state — all as landlords are moving quickly to take advantage of the end of a federal eviction moratorium.
For now, at least, America’s working poor are on their own again.
It didn’t have to be this way. Instead, it was a choice from Congress and the White House to let the three unemployment programs tucked inside the CARES Act expire. The end of the $300 boost to benefits — reduced from its original $600 — will be the most visible change for people still able to collect unemployment checks from their state government. But the end of the two other programs will have a much harsher impact.
The first, the Pandemic Emergency Unemployment Compensation program, allowed people who had depleted their state benefits to continue to collect aid. The second, the Pandemic Unemployment Assistance program, gave access to unemployment benefits for freelancers, contractors, people in the entertainment industry and others who might not normally qualify.
The latter is especially concerning for the people whose industries have yet to fully recover from the pandemic, for example those that are linked to live entertainment or travel. As the delta variant continues its spread, and as case numbers continue to tick up, we’re seeing major events, such as Jazz Fest in New Orleans, get canceled — again. That’s more turmoil for workers who have already had a rough year and a half.
There are some conservatives and Republicans who argue that ending these benefits is a good thing for a country that is in the middle of a labor shortage. But the evidence says otherwise. Half of the states ended their unemployment boosts early, during the summer, and, according to The Wall Street Journal and economists, saw no corresponding boost in hiring.
Worse, the Bureau of Labor Statistics’ jobs report for August showed the U.S. economy adding only 235,000 jobs — compared to the 720,000 that economists had expected. It’s also less than the 340,000 new initial jobless claims that were reported Thursday. Taken together, that means even as the job market lags, we’re preparing to see a decline in consumer spending as the unemployment benefits expire.
The net effect is people scrambling to figure out how to make ends meet in the coming weeks and months. President Joe Biden has said states can use remaining federal relief funds to supplement their unemployment insurance programs — but so far, none has. And while some assistance, including the expanded child tax credit, is still providing help, that leaves millions without the safety net that had been in place.
Lawmakers are returning in September to a slew of looming deadlines and intense negotiations on the $3.5 trillion economic package Democrats want to pass before the end of the month. The weeks spent in limbo as underemployed and unemployed people wait to see what assistance will be available moving forward will be torturous. If Democrats are going to be the party that actually benefits the poor and impoverished people of the country, now is the time to put their money where their mouth is.