October 30, 2020

If Congress Cuts Jobless Benefits, ‘It Would Be a Disaster’

When I called Mary Proffitt at her home in Lexington, Ky., last week, the 63-year-old lifelong Kentuckian picked up the phone and rap was blaring in the background. “Hold on, let me get away from the concert here,” she said, laughing. “My 12-year-old is making music.”

Back in March, Ms. Proffitt was laid off from her $11-per-hour job at CoreLife Eatery on the southern edge of town. She is struggling to keep her family afloat, supporting her adopted son, Isaac, and her immunocompromised father, who lives nearby. And like many Americans, she is frustrated with the government’s halting economic response to the coronavirus pandemic.

“It’s so hard for me to understand,” she said. “Because this is a health issue, not a political issue. But they’re making it one.”

On March 25, Congress approved a $600 unemployment insurance supplement to top off the weekly benefits laid-off workers receive from their state governments — which, on average, replace less than half of workers’ wages.

Pre-unemployment weekly earnings

Economists from the ideological left to the center-right have described the federal supplement as a critical support for the more than 25 million people receiving the funds and for the economy at large. According to one estimate, about two-thirds of the laid-off workers receiving the supplement are now bringing in more money from unemployment insurance than they did in weekly earnings from their last job.

That $600 supplement is set to expire on July 26. House Democrats generally want to extend the program for several months, while most Senate Republicans have publicly supported eliminating or substantially decreasing the benefit, with the assumption that doing so will encourage people to return to work.

But even if a full extension is agreed upon by the end of the July session, Americans who rely upon the supplement are likely to experience a “two- to three-week gap” in new payments, according to Andrew Stettner, a senior fellow at the Century Foundation.

Delayed payments are already a reality for some out-of-work Americans because of overwhelmed state unemployment systems. Ms. Proffitt hasn’t received her federal supplement for nine weeks. She says the delay has forced her to eke out a living on her dwindling retirement savings — which plummeted during the market crash of 2008 and never rebounded — and make do with the $131 weekly state unemployment benefit.

“That just barely gets you Ramen noodles!” she said. With the coronavirus resurging in Kentucky and several other states, how is Congress, Ms. Proffitt asked, “going to take the money away when there’s all of these people like me who haven’t even received it yet?”

Javier Sagel, 41, in Tulsa, Okla., who supports his two sons, Benicio and Gabriel, with his wife and mother-in-law, had just been promoted to a management role at a local high-end hotel when the pandemic hit. Over 90 percent of the staff, including him, was laid off, he said.

ImageJavier Sagel with his sons, Benicio, 6, and Gabriel, 2.

With the federal unemployment supplement, “I am at just about where I was before in terms of take-home pay,” Mr. Sagel said. But his Oklahoma state unemployment benefits alone deliver less than one-third of what he was making at the hotel. “If the $600 gets yanked, I’ll have to start deciding, OK, which obligations can I afford to not meet: paying rent, student loans, car payments, putting food on the table? It would be a disaster.”

When I asked him what he thought of the potential compromise in Congress that has been floated in the press — cutting the weekly unemployment benefit to between $200 and $400 per week — he scoffed: “Why even consider going out of the way to make cuts to people’s livelihoods?”

That sentiment was echoed by Caroline Barber, 21, a student at Georgia State University, who was laid off from her job at a restaurant.

“I honestly don’t understand how you have a criticism of the $600,” Ms. Barber said. “That’s so dark considering how deep wage stagnation has been.”

“I now have more money than I have ever had in my life, and it’s still not much,” she told me. “If the goal of these payments was to pump money back into the consumer economy, then I’ll mention that I bought myself a hammock — a pricey nonessential item, for the first time in my life. Is that what they want to hear?”

Putting aside the public health challenges created by pushing people back into the work force right now, it is not clear that there are enough open jobs for workers to return to.

Some experts estimated that at the end of May there were roughly four unemployed American workers for every job opening available. The economy could be half open in certain industries and regions for months, perhaps years.

Kingslea Bueltel, 38, a unionized camerawoman in the film industry in New Mexico, told me there’s talk among producers of no projects restarting “until 2021 or even until there’s a vaccine.” That could be a career-ruining delay.

“I’m fortunate,” said Ms. Bueltel, who makes $140,000 annually when working. “But I’m receiving about one-fourth of my usual weekly wage” and “worried about losing the new house.”

Britt Coundiff, 32, in Indianapolis, said she wants Senate Republicans to understand that her willingness to work, even as the coronavirus resurges, isn’t the problem. “I’ve been trying to apply to jobs since May, but businesses don’t have any new positions,” she told me. She was laid off from her $10-per-hour job at an art-house cinema, and her side gigs as a hostess at bars and restaurants around the city have all dried up.

But thanks to the $600 supplement, Ms. Coundiff said, she and her partner have been able to pay off some credit card debt, get a washer and dryer, and pay all of the bills on time.

“If Congress does not continue these benefits, my partner and I are looking at making around $193 a week each with Indiana’s unemployment allowances,” she said. “With two kids and rent and groceries, that is not enough for us to survive.”

For many, the pandemic has compounded the pain of a year that was already uniquely challenging. Liaya Arrington, 41, who lives in Atlanta with her 15-year-old daughter, was making over $3,100 a month as recently as September. But taking care of her disabled sister, who had fallen gravely ill, meant she couldn’t hold on to her job in account management at Aaron’s Inc., a lease-to-own retailer. She lost the job shortly after her sister died in late August. Ms. Arrington was searching for comparable jobs again. Then came the virus.

Ms. Arrington said she has managed to stay in her apartment by pairing credit card spending with the $365 she receives per week in Georgia state unemployment benefits. She hasn’t received the federal supplement yet. If nothing changes, she said, she’ll be facing eviction soon.

Two months ago, the House of Representatives passed a $3 trillion package, the Heroes Act, that included an extension the $600 unemployment supplement. Senator Mitch McConnell, the majority leader, who is largely in control of what happens next, dismissed the bill, filled with progressive priorities, as a “parade of absurdities.” But he and his Republican Senate allies have so far failed to issue a formal counterproposal.

In the House, Republican Representatives Ted Budd and Ken Buck introduced a bill in May that “caps the amount an individual can receive from unemployment insurance at 100 percent of their previous wages,” but it has languished in committee and been sidelined by leadership.

According to the aides I spoke to, congressional Democrats are banking on Senate Republicans who are up for re-election (including Mr. McConnell) recognizing their political self-interest in keeping families in their states whole, at least through Election Day.

Ms. Proffitt, the Kentuckian still waiting to receive her full unemployment benefits, is furious about Mr. McConnell, her state’s senior senator. “We’re being held hostage,” she said, her honey-soft drawl now laced with a bit of venom. “They think we’re on vacation!”

If she had the chance to sit down with Mr. McConnell, I asked her, what would she say?

“Well, first, I would want to know why for the last 30 years every time I have written and called his office, I got some lame ‘blah, blah, blah’ form letter back. Then I’d ask why he never votes for the constituents’ needs — and I’m saying that nicely.”

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