Congress must take swift action or have worse jobless rate this winter

Congress must take swift action or have worse jobless rate this winter
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How bad is unemployment more than six months into the pandemic? Over 26 million people continue to collect unemployment benefits, while over 800,000 workers join them weekly. The answer is it is bad. Unfortunately, there is a chance we could look back this winter and see these numbers as better than the alternative of being without jobs and without benefits. We are staring at a dramatic drop in unemployment insurance, which has served as the only lifeline for many families in this downturn.

While the $600 weekly benefits provided by the Cares Act ended during the summer, we still face two more deadlines. The pandemic emergency unemployment compensation, which extends benefits for 13 weeks with traditional claims, is set to end this December, along with the pandemic unemployment assistance, which allows those who do not usually qualify for benefits to claim them. This would create a financial cliff and eliminate benefits for millions of workers who are unable to find jobs.

The effects are dire for both individual households and the economy as a whole. The data shows 50 percent of white households and 30 percent of households of color do not have any rainy day funds. Of the ones that do, less than a fourth have enough to last three months. Further, by the end of the year, even those with savings will see those funds gone.


The negative impacts of letting this relief end are numerous. Losing these extensions would set millions of people and their families at risk of falling into poverty, forcing people to turn to other safety net programs. It would push more workers out of the labor market. It would also worsen the kinds of jobs available once the economy recovers. Recent research shows that unemployment insurance extensions introduced with the Great Recession allowed workers and employers to find better matches when the economy recovered, which in turn increased productivity and wages.

Failing to extend the unemployment benefits would also have devastating effects on the economy as a whole as millions of workers pause consumer purchases. The Cares Act benefits allowed millions of workers to continue spending, allowing consumer activity to recover somewhat in the midst of the coronavirus. Every dollar an unemployed person spends doubles as it runs across the economy. Suppliers, producers, and workers also increase consumption. Failing to extend benefits would hurt the people affected by more job losses and would also delay any hope of a recovery.

Even a recovery remains uncertain. On the consumer side, confidence is low and spending prospects in the year ahead remain half as favorable as before the downturn. On the business side, employers are hesitant to hire and continue to lay off workers in significant numbers. Job postings have fallen drastically and only partially recovered to levels before 2018. Even several iconic companies, such as Neiman Marcus and Brooks Brothers, are starting to close their store fronts and declare bankruptcy.

To remedy this, Congress must take swift action to extend unemployment insurance benefits an additional 13 weeks. Beyond that, extensions of up to 20 weeks should be introduced that are automatic depending on state unemployment rates or the number of unemployment claims. This might sound like a lot, but it is still less than the 99 weeks provided in the Great Recession, which was even a milder downturn by comparison.

A simultaneous enactment of a job seekers allowance provides coverage beyond traditional unemployment insurance and allows for the smoother entry of workers not only in times of crisis. The financial cliff is close but the positive news is that it is within our reach to move away from the risk. To do so simply warrants critical action from our policymakers.

Adriana Kugler is a professor with the McCourt School of Public Policy for Georgetown University and was chief economist of the Labor Department.