Millions ‘hanging by a thread’ when coronavirus aid expires

When Brandon Humberston’s weekly unemployment benefits finally kicked in after months of waiting, the $ 750 (£ 586) check was a “godsend.”

Suddenly, the 19-year-old, who was working as a cook at the Mexican restaurant chain Chipotle until the pandemic cost him his job, could pay the rent and buy groceries, even save a little.

Now much of that income is destined to disappear.

The additional payment of $ 600 per week that the United States approved to complete unemployment benefits during the pandemic will expire on July 31. In many states, recipients have already received their last check.

“It is pretty dire,” says Humberston, whose benefits will drop to $ 150. “My generation is hanging by a thread.”

The fight for more than $ 600

When the United States approved more than $ 2.4 trillion in spending this spring to try to protect its economy from the damage caused by the coronavirus, economists warned that more would be needed.

Lawmakers in Washington have yet to act.

While Democrats have proposed another $ 3 trillion in spending, Republicans have rejected that plan and remain divided on how much more help, if any, is warranted.

The fate of the unemployment benefits on which Humberston, and an estimated 30 million other Americans depend on, is urging debate.

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When Congress increased payments by $ 600 a week in March, it nearly tripled the average benefit payment. The move meant recipients could claim roughly the equivalent of the country’s median salary of about $ 975.

Republicans are now pushing to reduce the temporary bonus that will expire at the end of the month.

They say it is discouraging people from going back to work, pointing to research showing that more than two-thirds of current beneficiaries, most of them in low-paying jobs, now earn more in unemployment than when they worked.

‘There are no jobs’

Humberston says those fears are out of the question. He says he has applied for dozens of jobs in his home state of Oregon with no luck and the real problem is that employers are afraid to hire due to the pandemic.

“I mean, find what job? That’s the question: There are no jobs, there are no jobs anywhere.”

American employers have cut nearly 15 million jobs since February. That despite strong hires in May and June, when locks eased and companies received payroll support from the government.

That money is running out and as virus cases increase, a second wave of layoffs begins.

Companies that announced cuts last week included LinkedIn, Nike and the Dow Chemical Company. Many smaller companies are also cutting back.

Economic risk

In an economy that depends on consumer spending, experts warn that now is not the time to eliminate the unemployment bonus. Some economists have warned that the measure could reduce growth by 2% or more.

“Recovery at this point is at significant risk,” says economist Karen Dynan, a Harvard professor and member of the Peterson Institute for International Economics.

Other countries, including the United Kingdom, have announced additional stimulus measures this month.

Professor Dynan says that as the November presidential election approaches, US lawmakers will finally reach some kind of compromise on unemployment payments, which now reach nearly a fifth of the US workforce.

But she says that alone will not be enough. She says that businesses and local governments, which face large budget gaps due to declining activity, also need support.

“They need to do more,” she says. “That’s clear.”

The number of people who filed new unemployment claims increased last week for the first time since March. Food banks have been overwhelmed, and as temporary eviction bans end, cities prepare for a wave of homeless people.

People are in “absolute panic” as the deadline for extending the benefit approaches, according to Courtney Henley, one of the administrators of a Facebook group that helps people navigate the unemployment system.

Ms. Henley, who runs an event business in New York, has been dependent on payments herself since the pandemic.

After spending much of the spring in quarantine after contracting coronavirus, Henley says he’s starting to think about how to reinvent his business for digital meetings. But many of its clients are small businesses, which are also suffering.

“Almost everything I do, I can’t do it now,” she says. “If that goes away, I’ll try not to be able to pay the bills.”

She says Republicans are not being “realistic” about the state of the economy.

“Things have not yet reopened. People are still recovering,” she says. “We just hope that our government doesn’t just let American workers starve.”