Millions Will Lose Unemployment Benefits. That Doesn’t Mean They’ll Return To Work

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Marianne LeBlanc stages in-person corporate events. But those jobs disappeared during the pandemic and have been slow to return.

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Kelly Creative

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But research shows that most people who lose their benefits don’t find jobs right away.

About two dozen states ended the federal jobless aid earlier this summer in hopes that would drive many more people back to work. But despite a record number of job openings, it didn’t. Unemployed people in states that cut benefits early were only slightly more likely to find jobs than those in states that kept paying.

«There wasn’t a huge difference in the rate at which they returned to work,» said economist Michael Stepner of the University of Toronto, who was part of a team that conducted the research. «There was a huge difference in the amount of benefits these workers received and the amount of money that they spent in their local economy.»

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That pattern is likely to be repeated across the country when millions of people lose their benefits next week.

«Taking away their benefits is not going to send them back to work,» Stepner said. «It’s really going to increase poverty and reduce people’s spending.»

Ending the benefits likely will have ripple effects throughout the economy.

«These are people that buy groceries and put gas in their car and frequent local businesses,» LeBlanc said. «When that money is not there, it’s not just going to be the person who’s unemployed that’s going to suffer. It’s going to be the entire community that suffers.»

Several emergency jobless benefits were launched during the pandemic

Chenon Hussey’s household in West Bend, Wis., will lose about $2,800 in monthly aid.

«It’s hard when you’re raising a family,» Hussey said. «You don’t have any idea what the next few months are going to look like.»

Hussey and her husband have benefited from several emergency unemployment programs the federal government launched during the pandemic.

One program extends jobless benefits to gig workers and the self-employed, which helped replace some of Hussey’s lost income as a motivational speaker. Another boosts traditional unemployment benefits by $300 per week, which was crucial when her husband was temporarily furloughed from his job as a master welder. A third program extends aid to people who are out of work for more than six months.

All three programs expire on Monday.

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Chenon Hussey’s household will lose about $2,800 in monthly aid.

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Kevin Hussey

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Economists at Wells Fargo estimate that once pandemic programs expire in the remaining states, federal unemployment payouts will drop from $32 billion a month to around $3 billion.

While wages and a new child tax credit will offset some of that drop, «the increases in various other categories of personal income will not be enough to offset the hit from jobless benefits going away,» the economists wrote.

The Biden administration says if states choose, they can redirect other federal funds to extend jobless benefits beyond next week. So far, though, no state has announced plans to do so.

• coronavirus pandemic
• U.S. economy
• Jobs
• unemployment benefits