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Washington DC deadlocked as 30 million have their unemployment benefits cut

By staff |
August 6, 2020
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San José, CA - Talks between Democrats and Republicans about extending economic aid remained deadlocked as of Thursday morning, August 6. In May, Democrats passed their HEROES act to extend the $600 additional unemployment benefit, known as FPUC, or Federal Pandemic Unemployment Compensation, as well as other economic aid for renters, state and local government, and others. But Republican senators and the Trump administration did nothing, hoping that the COVID-19 pandemic would go away, and the economy would recover in short order. The Republicans have also been hampered by divisions in the Senate, where a large minority don’t want to extend any more aid. The Trump administration had its own proposal for a payroll tax cut that the Republican-majority Senate rejected.

In the meantime, new applications for unemployment compensation topped 1 million for the 20th week in a row. The total number collecting – whether for regular state unemployment insurance, the federal Pandemic Unemployment Assistance for gig workers and self-employed, or the federal Pandemic Emergency Unemployment Compensation for long-term unemployment - rose in the latest week reported, to 31.3 million people. These people have now lost their $600 a week in additional benefits that helped millions to stay current on their rent and feed their families.

Republicans opposed extending the $600 a week on the grounds that it would discourage the unemployed from taking jobs - even though economic studies have found this to be not true. Even if it were, there are more than 30 million people who have lost their aid and only about 5 million job openings - in effect punishing tens of millions of people for not taking jobs that aren’t there. The fact of the matter is that the $600 a week additional aid helps to support the economy. Economists estimate that the loss of the benefit through the end of the year would result in a loss of a million jobs as the unemployed cut back on spending.

Another sign of the weakening economy the private ADP report on private sector job hiring, which came in on Wednesday, August 5 at only 167,000 for the month of July - only a small fraction of the 1.2 million expected by economists. This points to a poor official government employment report coming out on Friday, with even a possible overall loss in jobs in July. State and local governments are expected to cut hundreds of thousands of jobs, as they did in June and May, with sales tax revenues down 12% in the April to June period alone, more than three times as great as in the 2007 to 2009 recession.

A recent survey found that 31% of workers hired back in May and June after a first layoff in March and April had already been laid off a second time. Another 26% were told by their employers that they might lose their jobs again. This instability for workers is depressing spending, despite all the economic aid, with total spending for June 7% lower than it was before the recession began in February.

Another concern is the growing number of evictions. Thousands of evictions notices have been filed, many of them despite eviction moratorium. With the federal eviction and foreclosure moratoriums also expiring at the end of July, more than 40 million people could be facing the threat of eviction. Millions could end up in the streets in the midst of the pandemic and just months before winter begins to set in.

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