Since the onset of the coronavirus, Americans have experienced shrinkage in their benefits especially in the past few months. With the holiday season just around the corner, the situation is expected to worsen. Mind you it will not be related to presents shopping.
How it all started
The first blow was the expiration of the $600 a week unemployment benefits in July. This amount was lowered to $257 from the initial amount of $812. An even more devastating blow is coming in American’s way come this Christmas. According to a new report by Andrew Stettner and Elizabeth Pancotti, 12 million Americans will have their unemployment benefits drop to zero. Due to this, personal incomes will also experience a drop of roughly $226 million.
Who will be affected?
Americans who will be affected by this slash include freelancers, gig workers, and self-employed workers, and jobless Americans. This group of people is projected to exhaust their maximum number of weeks that they can receive jobless benefits. Before the pandemic, this group was ineligible for unemployment benefits. However, through CARES Act program known as Pandemic Unemployment Assistance, these workers received the $600 unemployment benefits which unfortunately expired back July. These workers were also eligible for their individual state unemployment benefits.
The expiry date
The state unemployment benefits is expected to expire on December 31st. However, since the state workforce agencies usually pay out on Saturday, 7.3 million Americans who have received their benefits through the program will receive their last checks on December 26th, a day after Christmas. 4.65 million Americans will also see their benefits slashed on the very same day. These Americans were also approved for an additional 13 weeks of unemployment through the program.
California and New York
2.3 million Californians and 1.4 million New Yorkers will be the most affected Americans as the largest share of workers live in these states. These workers will stop receiving unemployment benefits on 26th December as well. It is highly unlikely that lawmakers will pass a second stimulus package before these unemployment benefits expire.
Repercussions for the future
According to past research, the longer Americans remain unemployed with no unemployment benefits, the lower their chances of getting reemployed. This will prompt such individuals to leave the taskforce altogether. And if they happen to land a new job, they are more likely to settle for lower wages than they used to receive.
Stettner and Pancotti further explain that joblessness causes worker’s skills to erode which discourages the worker.
According to the two researchers, workers who are unemployed for long exhaust their savings and increase their borrowing