The Delta variant is jeopardizing the economic recovery, but Congress isn’t budging as 20 million workers are set to lose unemployment aid

Unemployment insurance weekly benefits stimulus checks recession job losses coronavirus pandemic
Carlos Ponce joins a protest in in Miami Springs, Florida, asking senators to continue unemployment benefits past July 31, 2020. Joe Raedle/Getty Images
  • Over 20 million Americans will lose pandemic-relief benefits in September, the People’s Policy Project finds.
  • But the pandemic isn’t over, as Covid cases are on the rise because of the Delta variant.
  • Just weeks before the relief benefits expire, Congress does not appear set to extend them.
  • See more stories on Insider’s business page.

Millions of Americans are still drawing federal unemployment insurance, but the end of those programs loom. That would be one thing if the economy were recovered or if the pandemic were over, but neither is the case.

Over 20 million Americans are poised to lose all jobless aid on Labor Day, per a new analysis from the left-leaning People’s Policy Project. That includes recipients of Pandemic Unemployment Assistance – which extended eligibility for benefits to gig workers, among others – along with those who received benefits past the number of weeks their state provides. It also encompasses a $US300 ($AU407) federal weekly supplement.

The jobless workers facing down a fiscal cliff may also have to contend with the expiration of other relief measures, such as the lapsing eviction and foreclosure moratoriums and the restart of student-loan payments. Congress isn’t working on a contingency plan.

“Congress screwed up in their decision-making of what policies to include in the American Rescue Plan,” Marc Goldwein, head of policy at the nonpartisan Committee for a Responsible Federal Budget, told Insider.

Biden’s additional $US300 ($AU407) in weekly benefits amounted to 100% wage replacement, Goldwein said, and it isn’t phased out or tied to economic conditions. “A 100% wage replacement policy to go through Labor Day made very little sense,” he said, but on the other hand, “setting unemployment benefits to expire on Labor Day also made very little sense.”

“I don’t expect the job market to be fully recovered by Labor Day,” Goldwein said. “And it seems like with the new Delta variant, there is going to be more virus out there than we expected.”

A New York Times analysis finds that there’s been a 144% increase in Covid cases over the past 14 days, with a seven-day average of 56,635 new cases. Although this week’s GDP reading could show that the economy recovered its output by the end of June, the labor market is still down 6.8 million jobs from February 2020.

Unemployment systems frequently found themselves overburdened throughout the pandemic, leaving many eligible recipients behind. Bloomberg Businessweek reported on one worker in Nevada who waited seven months to receive his benefits. While he waited, he was evicted and had a heart attack; he later died.

President Joe Biden has signaled that unemployment reform could be part of his infrastructure package, but there’s been very little discussion about it in Congress. Sens. Ron Wyden and Michael Bennet put out a bill earlier this year that would bulk up weekly payments and ensure additional aid for gig workers.

“I’m not going to let any opportunity go by to prevent these continued crises where vulnerable people through no fault of their own are unable to get jobs,” Wyden, the chair of Senate Finance Committee, said in an interview. He described it as a “complicated issue.”

Wyden said he’s been in close contact with the White House, which hasn’t committed to including the reform bill into a party-line package. “I’ll let them speak for themselves, we have talked to them repeatedly about this at considerable length,” he told Insider.

But, as the fiscal cliff looms, “I think we need to have a discussion about continuing some parts of the benefits,” Goldwein said, especially when it comes to extending the number of weeks people are eligible.

Another complicating factor: Over half of the states in the country have already rolled back their participation in federal unemployment benefits, with some completely and prematurely ending the programs that expanded eligibility, as well as the number of weeks people can receive benefits.

As several lawsuits have shown, it may not have been legal for governors to cut off these benefits in this fashion, but Biden’s Labor Department has decided not to get involved. It’s another way the government has backed off pandemic relief – while the pandemic has continued raging on.