7.5 million workers face 'historic' unemployment benefits cliff in September

An estimated 7.5 million unemployed workers will be left with no benefits in September when key pandemic unemployment programs are set to end.

“I would call it historic,” Andrew Stettner, an unemployment insurance expert and senior fellow at The Century Foundation (TCF), told Yahoo Money when asked about the benefits ending. “We've had temporary federal unemployment benefits many times before, during economic recessions, but Congress has never cut them off with this many people still relying on them.”

Approximately 4.2 million workers are estimated to be on the Pandemic Unemployment Assistance program when it expires in September, according to an analysis by the Century Foundation. The program is for workers who usually don’t qualify for regular unemployment insurance, including contractors and freelancers.

Another 3.3 million workers are estimated to be on the Pandemic Emergency Unemployment Compensation (PEUC) that extends the duration of the unemployment benefits when the program expires in September.

An additional $300 of weekly benefits, paid for by the federal government, will also run out in September.

Those 7.5 million workers join 4 million unemployed workers who already lost some or all of their benefits in June and July after 26 states opted out of federal programs early.

And while the jobs recovery has accelerated in the summer months — with the unemployment rate falling to 5.4% in July — the volume of people relying on temporary unemployment programs is still elevated compared with previous recoveries from recessions.

In December 2013, 1.3 million workers were on Emergency Unemployment Compensation before it expired. Similarly, in December 2003, 830,000 workers were on the Temporary Extended Unemployment Compensation when it was phased out.

“This will certainly take some momentum out of the economy, and it will put people in harm's way,” Stettner said. “It's going to leave a lot of people scrambling to make ends meet and find work.”

‘The first fired and the last hired’

Black workers will be disproportionately affected by the September cutoff in benefits, according to the TCF analysis. The Black unemployment rate was 8.2% in July, significantly higher than the white unemployment rate of 4.8%.

“Those who have gotten unemployment benefits during the pandemic, they have been disproportionately Black workers,” Stettner said. “This is not just about the industry those workers come from, but also soft and hard discrimination. ... Black workers tend to be the first fired and the last hired.”

The pandemic unemployment benefits have been extended three times during the pandemic and have delivered a total of more than $800 billion to families. No extension of the programs is included in the current infrastructure legislation moving through Congress, and another extension seems unlikely.

Many of the 26 governors who canceled programs prematurely have cited work shortages that they largely blame on expanded unemployment benefits despite limited evidence. There's also less support for any extension as the job market recovers, according to Stettner.

“The sympathy by policymakers and the public has turned a little bit away from the unemployed,” he said. “It's just hard... especially at a time when a lot of the Republican governors have rebelled against this, and the Chamber of Commerce has rebelled against federal unemployment benefits.”

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