Nearly 1.1 million Americans on unemployment face risky jobless period

Finance

Hundreds of unemployed workers wait in long lines outside the Kentucky Career Center for help with their unemployment claims on June 19, 2020 in Frankfort, Kentucky.

John Sommers II | Getty Images

More than 1 million Americans have started dipping into an unemployment fund meant for extended periods of joblessness.  

Research suggests these individuals will have a harder time finding a job than others, amid an employment crisis worse than any time since the Great Depression, according to experts.  

That, in turn, may put them at greater risk of exhausting unemployment aid in the coming months.

The CARES Act

Most states offer jobless workers up to 26 weeks, or about 6 months, of unemployment benefits. A handful offer less.

The average worker got $378 a week in March, according to the Center on Budget and Policy Priorities. 

The CARES Act, a federal coronavirus relief law enacted in March, offered up to 13 weeks of additional unemployment benefits to jobless workers who’d exhausted their state allotment.

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It did so via a program called Pandemic Emergency Unemployment Compensation.

Nearly 1.1 million Americans were collecting benefits through that program as of May 30, according to most recent Labor Department data — which is more than double the number from the prior week.

That number also understates the true figure, since the Labor Department only reported data from 35 states.

“Far more people would be left completely with nothing if Congress hadn’t implemented PEUC,” said Heidi Shierholz, director of policy at the Economic Policy Institute. “The fact that 1 million people are already on it underscores just how important it was that Congress started that program.”

Long-term unemployment

Many of these recipients likely became unemployed before the pandemic, according to Ioana Marinescu, assistant professor of economics at the University of Pennsylvania.

That’s because six months — the typical duration of unemployment benefits — hasn’t yet passed since the pandemic began gouging jobs in the wake of state-mandated business closures in March. 

These workers, which labor economists would call “long-term unemployed,” may be in a more-precarious position than the rest of their unemployed counterparts.

“We know those who are long-term unemployed find it very hard to find a job,” said Marinescu.

That may be due to the stigma employers place on hiring someone who hasn’t held a job for a while, for example, she said.

Workers unemployed for long stretches  also typically earn lower wages when they rejoin the workforce.

And these individuals, who had been unable to find employment when the unemployment rate was at its lowest level in half a century, will likely have a much tougher time when it’s skyrocketed to its highest level since the Great Depression.  

Around 21 million Americans were unemployed as of May.

We know those who are long-term unemployed find it very hard to find a job.

Ioana Marinescu

assistant professor of economics at the University of Pennsylvania

“Some of those individuals, if it weren’t for the lockdown, may have actually found a job,” Marinescu said. “But then the lockdown happened, which made it super-hard to find a job at that point.”

This potential difficulty in finding a new job may coincide with a substantial reduction in the unemployment safety next month.

The CARES Act also gave $600 a week to jobless workers, on top of their weekly state benefits. That aid expires after July 31, potentially putting a significant dent in household cash flow for millions of unemployed individuals.

Less-generous states

The numbers of Americans collecting the extra 13 weeks of aid is set to spike in coming weeks, especially for workers in less-generous states, experts said. 

Florida and North Carolina pay up to just 12 weeks of state unemployment benefits, while Alabama offers up to 14, for example, according to the Center on Budget and Policy Priorities.

Since the CARES Act was only enacted March 27, many workers in these states will soon start exhausting their standard allotment of benefits.

“I think we’ll see PEUC absolutely ballooning in the coming weeks,” Shierholz said.

Many of these workers will remain covered by the unemployment safety net for several more weeks. 

Once workers exhaust their additional federally funded 13 weeks of unemployment, most states will offer an extra 13 to 20 weeks of “extended benefits.” These are triggered during periods of high state unemployment.

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