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$600 unemployment benefits expire as more workers lose jobs

By Masao Suzuki |
July 24, 2020
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San José, CA - The $600 a week in additional unemployment insurance benefits is set to expire at the end of July. This aid is called the Federal Pandemic Unemployment Compensation or FPUC. More than 25 million people who are receiving regular state unemployment benefits, or the federal Pandemic Unemployment Assistance or PUA for the self-employed, will lose their FPUC benefit.

With the average state unemployment benefit paying about $350 a week, the loss of the extra $600 a week will cut jobless workers’ income by almost two-thirds. House Democrats passed a $3 trillion HEROES Act back in May to extend aid past the July cutoff. Senate Republicans and President Trump did nothing but badmouth the bill. As of Thursday, July 23 they still haven’t come up with a bill to extend economic aid, making the expiration all but certain.

While 30 million people have been added to the state unemployment benefit programs or to the federal PUA since the recession began in February, millions more have faced long delays in getting their claims processed or getting paid after being approved. More than 6 million people who are not getting FPUC have been added to the federal Supplemental Nutrition Assistance Program or SNAP, generally known as food stamps. Millions more have been lining up at food banks across the country as hunger is on the rise. About 30% of adults who lost their jobs are suffering from food Insecurity, almost three times the average rate for all households before the recession. The end of the extra $600 a week will mean even more hunger, as SNAP maxes out at $500 a month in food aid.

One benefit of the extra $600 a month in unemployment aid from FPUC is that many people have been able to make their rent or mortgage payments in April, May, and June despite losing their jobs. But the loss of this benefit combined with the expiration of the federal restriction will bring a wave of evictions in the midst of a pandemic starting in August.

The need for an extension of benefits was highlighted today by the Labor Department report that new claims for regular state unemployment benefits rose by almost more than 100,000, to 1.42 million. This was the first increase in applications since March. In addition, the new claims for the federal PUA numbered 975,000, up 20,000 from the week before. Together the two represented almost 2.4 million people who lost their jobs or livelihood in the week ending July 18. For the first time, all 50 states have extended benefits to those who have run out their six months of regular aid, showing that longer term unemployment is spreading across the country.

Another sign that the economy is beginning to buckle under the growing weight of the COVID-19 pandemic was the drop in the University of Michigan Consumer Confidence Index last Friday. While most economists had expected an increase, the growing pandemic is weighing on consumer sentiment, which points to more bad news for the retail business sector. Estimates are now that a net 20,000 stores could close this year, more than double the rate of last year. The latest addition to this list was the retailer Ann Taylor, which declared bankruptcy and said it would close 1000 stores.

After the initial explosion of the pandemic in March, most (but not all) of the country issued stay-at-home orders, closing many of the businesses not already shut by the pandemic itself. But all too many states reopened businesses too quickly, continued to reopen even as infections started to rise again, did not develop effective testing and tracing, and did not make changes like requiring masks.

The latest figures are that more than 4 million people are confirmed infected, which is twice the number of just six weeks ago. Deaths are on the rise again, and more and more states are reporting that their hospitals are full. This is forcing more and more small businesses to throw in the towel, as well as heavily indebted corporations to declare bankruptcy. In addition to layoffs, some 7 million more workers have had their wages cut. This was not common during earlier recessions. The last time many workers faced wage cuts was during the Great Depression of the 1930s. Almost twice as many workers have had their hours cut, for a total of about 20 million more Americans who have lost income on top of the more than 30 million who have lost their jobs.

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