Millions of unemployed Americans lost pandemic-related jobless benefits as of Labor Day – just as surging cases of coronavirus slow the pace of hiring.

In all, an estimated 8.8 million people stopped receiving unemployment insurance beginning on 6th September, 2021. Millions more will no longer get the extra $US300 a week the federal government has been providing to supplement state benefits.

US NYC Brooklyn food aid

People wear protective face masks as they wait in line to receive free food at a curbside pantry for needy residents run by the Catholic Charities of Brooklyn and Queens during the outbreak of the coronavirus disease (COVID-19) in the Brooklyn borough of New York City, New York, US, on 24th April, 2020. PICTURE: Reuters/Mike Segar /File photo.

But with the pandemic still raging thanks to the rise of the Delta variant, particularly in Southern states, the expiration of these benefits seems ill-timed. While some claim that the aid is no longer needed and doing more harm than good, we believe that the data tell another story.

Benefits lost
Three federal programs created to support workers hurt by the COVID-19 pandemic and related lockdowns expired on 6th September:

"[W]ith the pandemic still raging thanks to the rise of the Delta variant, particularly in Southern states, the expiration of these benefits seems ill-timed. While some claim that the aid is no longer needed and doing more harm than good, we believe that the data tell another story."

• The Pandemic Extended Unemployment Compensation program offered 13 additional weeks in state unemployment benefits. An estimated 3.3 million people who were getting benefits through this program lost them.

• Pandemic Unemployment Assistance provided aid to gig workers and others not normally eligible for unemployment benefits. About 5.5 million people were receiving aid because of this program – including those who just joined the rolls in the second half of August.

• The Federal Pandemic Unemployment Compensation program supplemented state benefits with an additional $US300 in aid per week – down from $US600 when it began in April, 2020.

All told, the end of these programs may affect 35 million people when you include families of the unemployed.

Dropping aid didn’t boost jobs growth
Critics of these federal supplemental benefits claim they reward Americans for not working by offering more in aid than they’d get from a job. This is why many Republican governors opted to drop out of one or more of the federal programs in recent months.

“We see ‘Help Wanted’ signs everywhere,” Idaho Republican Gov. Brad Little said on 11th May, 2021. “We do not want people on unemployment. We want people working.”

But the data we have so far simply doesn’t back up these claims.

We compared employment growth in the 25 states that decided to drop the federal $US300 supplement with those that kept it. Total employment in states that kept the federal supplement grew by 0.77 per cent in July, compared with 0.54 per cent for the states that gave it up, according to an analysis of Bureau of Labor Statistics, suggesting the benefits aren’t keeping workers on the sidelines.

The same pattern holds for sectors of the economy hit hardest by COVID-19. Leisure and hospitality jobs, such as waitstaff and cooks, accounted for roughly one in four of all jobs lost in 2020. Hiring rose 2.3 per cent in those industries in states that kept the federal benefit, compared with 1.55 per cent for other states.

This is consistent with a growing number of studies that show no correlation between the higher unemployment payments during the pandemic and lagging job growth.

We won’t know whether the trend continued until the state-by-state employment breakdown is released in mid-September. But for now, the evidence doesn’t support the claim that benefits keep folks at home.

Jobless Americans still need support
We do know that people who want to work are still being prevented from doing so because of COVID-19.

The latest jobs report, released on 3rd September, 2021, showed that 5.6 million people were unable to work in August because their employer closed or lost business because of the pandemic, up from 5.2 million in July.

That may help explain why companies hired only 235,000 in August – a third of what economists had expected. And there were no gains in leisure and hospitality, which pay some of the lowest wages of any industry.

As recently as late May, before the delta variant began causing caseloads to climb, pandemic-related unemployment claims were falling across all 50 states. Then, over June and July, claims spiked again as COVID-19 cases rippled across the country.

Nearly a third of those currently unemployed come from three sectors of the economy: health care and social assistance; accommodation and food services; and retail trade. According to industry wage data, none of these sectors provides a median wage that meets the minimum survival budgets of American households.

All this shows why these three federal programs are still so important.

The extended benefits give unemployed people more time to find a job while helping them cover basic expenses. Gig workers, like Uber drivers and other independent contractors, need unemployment benefits too, especially as 60 per cent of them lost income during the pandemic and many continue to struggle as business activity remains subdued. These workers are also less likely to receive employer-sponsored benefits like health care.

And the $US300 federal supplement is important because pre-pandemic state benefits – which are typically about $US340 a weekreplaced only 30 per cent to 50 per cent of lost earnings. Even with the supplement, for most people, it’s still less than what they were earning from their job.

Tough choices ahead
That’s why the expiring benefits mean so much to lower-income families, especially now that the Supreme Court has struck down the Centers for Disease Control and Prevention’s ban on evictions.

For many, losing the benefit could be the difference between choosing to pay for food or rent, or forgoing a doctor’s visit because of the high costs of health care.

But after the benefits expire on Labor Day, making ends meet and staying in their homes will be significantly harder for millions of American families.

The Conversation

Jeffrey Kucik is associate professor of political science at the University of Arizona and Don Leonard is assistant professor of practice in city and regional planning at The Ohio State University. This article is republished from The Conversation under a Creative Commons license. Read the original article.