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Pandemic unemployment benefits: who will lose aid in September and why?

The US jobs market has been decimated by covid-19 but as businesses are beginning to return to normal the pandemic-era jobless support looks set to expire soon.

The US jobs market has been decimated by covid-19 but as businesses are beginning to return to normal the pandemic-era jobless support looks set to expire soon.

Throughout the pandemic the federal government has funded additional unemployment compensation programmes to serve the millions of Americans who lost their jobs as a result of covid-19. First introduced in the CARES Act back in March 2020, the pandemic-era unemployment benefits were extended by President Biden a year later.

However he is showing no intentions of extending them further and on 6 September an estimated 13 million people will lose access to either the Pandemic Unemployment Assistance (PUA), Pandemic Emergency Unemployment Compensation (PEUC), or Federal Pandemic Unemployment Compensation (FPUC).

States opt to withdraw prematurely from federal programmes

While the 6 September deadline draws nearer, millions of out-of-work Americans have already had the unemployment support ended abruptly by states who have chosen to deny their residents access to the federal programmes.

TIME estimated that up to 4.1 million unemployed Americans in 26 states will be affected by the decisions by governors to cancel access to the support. Of those states to announce they would be opting out, 25 of them were Republican-led and governors typically complained that it was incentivising workers to stay at home.

However legal challenges have been launched by out-of-work residents in many states, arguing that the governor does not have the right to deny them access to a federal programme. Already courts in Indiana, Maryland and Oklahoma have overturned the governors’ decisions, while lawsuits still remain in Ohio, Texas, Tennessee, Florida and Arkansas.

Will there be an extension to the federal unemployment benefits?

The pandemic-era unemployment programmes have remained largely unchanged for the last 17 months and there is concern that to suddenly remove all the additional support could have drastic consequences for out-of-work Americans. As such, some are calling for new programmes, or even an extension, to be introduced to provide an extra safety net.

Eliza Forsythe, economist at the University of Illinois, believes that the standard unemployment compensation system may be insufficient if there is a considerable spike in covid-19 cases in the winter months.

She told CNBC: “It’s certainly possible we could have another round of economic contraction in certain areas if there’s an outbreak,” adding, “the unemployment system won’t be there for people the way it’s been over the past year.”

Recent evidence actually suggests that having the additional unemployment support in place may actually help the ongoing job market recovery. In the recently announced July jobs report, states still paying the pandemic jobless support enjoyed a greater decrease in their unemployment rate than those which had chosen to opt out of the programmes.


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