New applications for unemployment benefits rose again for the week ending Dec. 12—885,000 for state programs and 455,000 for the federal Pandemic Unemployment Assistance (PUA) program for a total of 1.34 million, up 5% over the previous week. Unless Congress acts, the PUA and other federal programs that provide extended unemployment benefits beyond what states allow will expire the day after Christmas. That would mean 12 million Americans would suddenly join the estimated 4.5 million who have already exhausted their benefits.
It appears that, nine months after Congress passed the first stimulus legislation with the $2.2 trillion CARES Act, lawmakers finally seem on the verge of passing a second bill for $900 billion that will extend benefits until March, include an extra $300 a week for those receiving unemployment checks, and provide additional rental assistance. Currently it’s estimated that Americans owe $24 billion in back rent. A nationwide eviction moratorium expires Dec. 31 without further federal action.
Heidi Shierholz at the Economic Policy Institute writes:
This bill would reportedly provide a 10-week extension of both PEUC [Pandemic Emergency Unemployed Compensation] and PUA, and reinstate FPUC [Federal Pandemic Unemployment Compensation]. The 10-week extension is wholly insufficient—it ensures millions will exhaust benefits before the end of February, as the virus surges and job openings remain scarce. Further, FPUC would be reinstated at only $300 per week, not $600. Though far better than nothing, the $300 is less than what is needed.
One reason it’s unfortunate FPUC was reduced to $300 is that UI is great stimulus. Reinstating the full $600 would create or save 3.3 million jobs; the $300 will create or save just half that. There are now 26.1 million workers who are unemployed or otherwise out of work because of the virus, or who have seen a drop in hours and pay because of the pandemic. And job growth has slowed dramatically.
Sarah House, a senior economist at Wells Fargo Securities, told The Wall Street Journal, “The next few months will be pretty rough for the labor market as you do see businesses having to contend with this latest wave of Covid cases. You are seeing those government restrictions coming into play again.” Some 26.1 million Americans are out of work or have had their hours or compensation cut.
The recent rise in claims is no surprise given the surge in the spread of the coronavirus, which on Wednesday killed the most Americans it has on single day since the pandemic began and has sparked new government stay-at-home mandates and restrictions on which businesses can be open. Though the initial recovery from the steep economic plunge in March and April was swifter than analysts had expected, with unemployment rates never reaching the 25% level that Fed Chairman Jerome Powell suggested in May might occur, the immediate damage has been extensive. As in the aftermath of the Great Recession, many people will face long-lasting repercussions associated with extended job loss, delayed education, exhausted savings, and evictions. Some people will never recover financially.
One major impact since the pandemic began is that, as of November, 3.9 million fewer Americans were in the workforce compared with a year earlier. That number is no doubt skewed by the fact the government counts as having left the workforce any jobless person who didn’t look for work in the past four weeks. Given the nature of the pandemic, that definition is even more wrongheaded than during “normal” times.
The economic fallout from the virus has struck women especially hard. With many schools closed, the nation’s child care, already in a critical state, became extremely problematic because of the virus. Mark Miller at The New York Times reports that the Pandemic Recession has disproportionately hurt women so much that it is being called a “shecession,” with the biggest hit taken by Latina, Black, and Asian American women, according to a YWCA USA study.
Policy experts have long acknowledged a gender gap in retirement security. Women tend to earn less than men, and they are more likely to take time off from work to care for children or elderly parents. Even brief career interruptions diminish wage growth, retirement savings and Social Security benefits, which are determined by wage history. Women also tend to outlive men, needing to stretch resources over more years. In particular, they face higher health care expenses in retirement.
In November, the national unemployment rate dipped to 6.7 percent from 6.9 percent, the Labor Department reported last week. But the pace of job growth has stalled, and millions have dropped out of the labor market altogether, especially women. One recent study found a disproportionate decline in employment for women of prime working age, 25 to 55, compared with men — and especially so for mothers.
Many problems arise from this situation, and a key one is the impact on women’s retirement finances. Even brief interruptions in paychecks can cut deep into retirement. For instance, a calculator created by the Center for American Progress shows what can happen. Take the hypothetical case of a 35-year-old woman earning $80,000 a year who drops out of the workforce for five years. If she retires at 67, her retirement benefits will be $197,000 less than if she had not stepped out for those five years.
If Congress does pass the stimulus package that’s being negotiated by party leaders, it won’t come near to fixing the economic wreckage of 2020. That will be a task for the incoming Biden-Harris administration, which will be hampered by the Democrats’ narrow majority in the House and, at best, a 50-50 split in the Senate. Passing legislation implementing a green recovery, with all its millions of jobs and effects on the climate crisis, is the obvious path as vaccinations convey immunity to the population. But GOP resistance to any programs that give workers a boost, much less seriously addressing a problem that half of Republican senators think is a hoax, will make getting such legislation to the president’s desk a very hard slog.