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Emergency unemployment benefits will run out for millions of people in less than a week. They've been a safety net for Americans during the pandemic. So what happens when the safety net is cut? Well, research suggests that such a move doesn't do much to boost employment and it may, in fact, cost the economy. Here's NPR's Scott Horsley.
SCOTT HORSLEY, BYLINE: Until last year, Chenon Hussey and her family were thriving. They owned a home outside Milwaukee. Her husband worked as a master welder, and Hussey had her own business as a mental health advocate and motivational speaker. Speaking gigs dried up, though, when the pandemic hit, and the specialty fencing company where her husband worked has endured a series of temporary layoffs.
CHENON HUSSEY: It's hard when you're raising a family and you don't have any idea of what the next few months are going to look like.
HORSLEY: Several federal programs launched during the pandemic have provided an important lifeline. One offers jobless benefits to the self-employed, which help replace some of Hussey's lost income. Another boosted her husband's regular unemployment by $300 a week. A third program offers extended aid to people who are out of work more than six months. But all of that extra help comes to an end next week. Hussey says she and her husband have both taken some temporary jobs but don't feel like they have much control.
HUSSEY: At the beginning of the year, there were some conferences that got scheduled and I booked them. But in the last two months, those conferences have been postponed because there's so many uncertainties.
HORSLEY: At last count, more than 12 million Americans were getting some form of unemployment assistance. Most will be cut off entirely next week. The rest will see their benefits reduced. Some states already ended the federal jobless aid earlier this summer in hopes that would drive more people back to work, but it didn't. Economist Michael Stepner of the University of Toronto says unemployed people in states that cut benefits were only slightly more likely to find jobs than those in states that kept paying.
MICHAEL STEPNER: There wasn't a huge difference in the rate at which they returned to work, but there was a huge difference in the amount of benefits that these workers received and the amount of money that they spent in their local economies.
HORSLEY: Stepner and his colleagues followed the fortunes of thousands of people whose unemployment benefits were cut off this summer. Most did not find jobs right away, so they had to reduce their spending dramatically. Stepner says that pattern is likely to be repeated across the country when millions of people lose their benefits next week.
STEPNER: Taking away their benefits is not going to send them back to work. It's really going to increase poverty and reduce people's spending.
HORSLEY: Wells Fargo estimates once pandemic programs expire, federal unemployment payouts will drop from more than $30 billion a month to around $3 billion. Marianne LeBlanc says losing that aid feels like jumping off a financial cliff. And she knows millions of others are about to go over the edge as well.
MARIANNE LEBLANC: Those are the people that buy groceries and they put gas in their car and they frequent local businesses. When that money is not there, it's not just going to be the person that's unemployed that's going to suffer. It's going to be the entire community that's going to suffer.
HORSLEY: LeBlanc lives in Nevada, which has the nation's highest unemployment rate. And jobs like hers, staging corporate events, have been slow to return. She's found a few days' work here and there but nothing steady. She worries the rise of the delta variant will put even that limited comeback on hold just as federal aid is running out.
LEBLANC: I was doing a project three weeks ago, and that was the week that all the mask mandates went back into play. We all looked at each other like, oh, God, is this all going to happen again? Just when you think you might see the light at the end of the tunnel, it's gone again.
HORSLEY: 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.
Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.
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