WASHINGTON – Expanded unemployment benefits that kept millions of Americans afloat during the pandemic expired on Monday, putting in place a sharp halt in aid to 7.5 million people as the Delta variant shakes the pandemic recovery .
The end of aid came without objection from President Biden and his top economic advisers, who found themselves embroiled in a political struggle for the benefits and are now banking on further federal aid and a fall recovery. of hiring to prevent vulnerable families from finding each other and food. lines.
The $ 1.9 trillion economic assistance package Mr Biden signed in March included extended and expanded benefits for the unemployed, such as a $ 300 a week federal supplement to state unemployment benefits, additional weeks of support for the long-term unemployed and the extension of a special program to provide benefits to so-called agency workers who traditionally do not qualify for unemployment benefits. The expiration date reached on Monday means 7.5 million people will lose their benefits entirely and another three million will lose the $ 300 weekly supplement.
Republicans and small business owners attacked efforts to extend aid, saying it had stalled economic recovery and fueled a labor shortage by discouraging people from looking for work. Liberal Democrats and progressive groups have pushed for another round of aid, saying millions of Americans remain vulnerable and need help.
Mr Biden and his advisers have pointedly refused to call on Congress to further extend the benefits, a move that reflects the prevailing view on the state of recovery in the administration and the president’s desire to focus on securing support for its broader economic agenda.
The president’s top economic advisers say the economy is completing a shift from federal aid to the labor market. As support for the March stimulus bill wanes, they say, more Americans are set to return to work, drawing paychecks that will fuel consumer spending instead of l government assistance.
And Mr Biden is pushing Congress this month to pass two measures that constitute a multibillion-dollar program focused on long-term economic growth: a bipartisan infrastructure bill and an expenditure bill. biggest supporter with investments in child care, education, carbon reduction and more. This push leaves no political oxygen for a short-term additional aid bill, which White House officials insist the economy does not need.
Administration officials say the money that continues to flow to Americans through the March law, including new monthly payments to parents, will continue to support the social safety net even as federal aid expanded unemployed expires. Mr Biden called on some states – those with high unemployment rates and a willingness to continue helping the unemployed – to use the March law relief funds to help the long-term unemployed. So far, no state has announced its intention to do so.
Mr Biden’s chief of staff Ron Klain told CNN’s “State of the Union” on Sunday that the March law also allowed states to help unemployed people by offering them job bonuses. employment, vocational training and counseling.
Understanding the Infrastructure Bill
- A trillion dollar package has passed. The Senate passed a vast bipartisan infrastructure package on August 10, closing weeks of intense negotiations and debate over the largest federal investment in the country’s aging public works system in more than a decade.
- The final vote. The final tally in the Senate was 69 for 30 against. The legislation, yet to be passed by the House, would affect nearly every facet of the U.S. economy and strengthen the nation’s response to global warming.
- Main areas of expenditure. Overall, the bipartite plan focuses spending on transport, utilities and pollution control.
- Transport. About $ 110 billion would go to roads, bridges and other transportation projects; $ 25 billion for airports; and $ 66 billion for railways, giving Amtrak the largest funding it has received since its inception in 1971.
- Utilities. Senators also included $ 65 billion to connect hard-to-reach rural communities to high-speed internet and help enroll low-income city dwellers who cannot afford it, and $ 8 billion for Western water infrastructure. .
- Depollution: About $ 21 billion would go to cleaning up abandoned wells and mines and Superfund sites.
“We believe the jobs are there,” Klain said, “and we believe states have the resources they need to move people from unemployment to jobs.”
Mr Biden has faced criticism from both left and right on the issue, and he has responded with a balancing act, supporting the benefits as approved by Congress but refusing to push for expand them – or defend them against attacks from rulers in certain states.
Throughout the summer, business lobbyists and Republican lawmakers have called on the president to remove the benefits sooner, blaming them for the difficulties some companies face in hiring workers, especially in less well-performing industries. remunerated like the hotel business. Shortly after the backlash began, Mr Biden defended the benefits, but called on the Labor Department to ensure that unemployed people who turned down job offers would lose their help.
But about half of the states, almost all of them led by Republican governors, decided to cut benefits early on their own. Mr Biden and his administration did not fight them, angering progressives. The administration is essentially extending this policy until the fall, calling only for willing states to replace expired aid.
“I don’t think we necessarily need a comprehensive policy for unemployment benefits at this point in the country,” Labor Secretary Martin J. Walsh said in an interview on Friday, “because states are in dire straits. different places “.
Privately, some administration officials have expressed openness that economic research will eventually show that the benefits have had some sort of chilling effect on workers’ decision to take a job. Critics of the additional unemployment benefits have argued that it discourages people from returning to work at a time when there are record numbers of job openings and many companies are struggling to hire.
So far, evidence suggests that programs play at most a limited role in excluding people from the labor market. States that ended the benefits earlier, for example, saw little to no upturn in hiring compared to the rest of the country.
Even in industries that have had the hardest time finding workers, many people don’t expect a sudden surge in job applications after benefits expire. Other factors – childcare issues, fear of the virus, savings accumulated from previous waves of federal aid, and a broader overhaul of work preferences in the wake of the pandemic – also play a role. role in preventing people from working.
“I think it’s a piece of the puzzle but I don’t think it’s the big piece,” said Ben Fileccia, director of operations and strategy for the Pennsylvania Restaurant & Lodging Association. “It’s easy to show, but I don’t think that’s the real reason.”
Progressives inside and outside Congress have grown frustrated with the administration’s approach to benefits, warning that it could backfire economically. Job growth slowed in August as the Delta variant spread across the country.
“Millions of the unemployed are going to suffer when benefits expire on Monday, and it didn’t have to be that way,” Oregon Democrat Senator Ron Wyden and finance committee chair said in a statement. press last week. “It is clear from the economic and health conditions on the ground that we should not be cutting benefits now. “
Elizabeth Ananat, an economist at Barnard College who has studied the impact of the pandemic on low-wage workers, said cutting benefits now, while the Delta variant threatened to delay the recovery, was a threat to the both for workers and for the population as a whole. economy.
“We have this fragile economic recovery and now we are going to reduce the incomes of the people who need it, and we are taking dollars out of an economy that is still quite unstable,” she said.
Ms Ananat followed a group of about 1,000 low-income parents in Philadelphia, all of whom were working before the pandemic. More than half lost their jobs at the start of the pandemic last year. This summer, 72 percent were working, reflecting the strong rebound in the economy as a whole. But that still left 28 percent of the group who were unemployed, either because they couldn’t find work, or because of childcare or other responsibilities.
“We are entering a new school year where there will be a lot more uncertainty than there was this spring for parents,” Ms. Ananat said. “Employers are going to face a situation again where they have people who want to work, but what the hell are they supposed to do when their child is sent home to quarantine?”
Measures of hunger and other hardships have eased this year, as the labor market has improved and federal assistance, including the expanded child tax credit, has reached more low-income families. returned. But cutting benefits could change that, Ms. Ananat said. “In the absence of some sort of solution, this cliff is coming and this number will go up,” she said. “This is a large group of people who are going to be in a much worse condition.”