What happens to jobless when the checks run out?
When jobless workers get their last unemployment check, the effect on spending is sharp and swift.
Unemployed workers’ spending on food, clothes and other so-called nondurable goods immediately drops 12%, about twice as much as when they lost their job and went on unemployment insurance, University of Chicago researchers have found.
Spending at drugstores falls 15%.
Copayments for visits to the doctor fall 14%. Spending on groceries falls 16%, or $46.30 a month, on average.
Millions of Americans are less than two weeks from cutbacks like those. The last two federal emergency unemployment programs in the CARES Act, passed as the pandemic’s first wave surged in March, expire Dec. 26.
An analysis by the Century Foundation concluded that 12 million workers who rely on one or the other of these programs will lose them on that day.
This will add to 4.4 million who will have already exhausted their federal unemployment benefits.
It projected that fewer than 3 million of these workers will be eligible for what are known as extended benefits, which kick in when the unemployment rate in a state is exceptionally high and can last six to 20 weeks, depending on the state.
If Congress and the administration are unable to hammer out a deal to provide additional relief, the others will be left with nothing.
“It was obvious this would be totally inadequate,” said Stephen Wandner, an expert on unemployment insurance at the Upjohn Institute for Employment Research, who has argued for extending unemployment benefits for a longer period, especially at a time when jobs aresohardtocomeby.
Wandner noted that unemployment benefits lasted up to 99 weeks — almost two years — as part of the recovery effort in the last recession. In 2003, when the nation was also recovering from recession, maximum benefits were extended as long as 72 weeks, or almost a year and ahalf.
Joblessness will not only affect consumer spending.
Nearly 12 million households fear they may not being able to meet their mortgage payments, according to a survey in October by Moody’s Analytics and Morning Consult.
Millions of others can no longer afford their rent.
And 37% of the unemployed said the coronavirus pandemic prevented them from looking for a job.
“You are really putting coal in people’s stockings,”
Wandner said.
At the end of November, 16 million reported they had not worked in the last seven days and were relying on unemployment insurance payments to make ends meet, according to a Census Bureau survey of Americans’ financial condition.
Losing those checks will translate into immediate hardship.
“Come Jan. 1, a lot of people are going to be on DEFCON 1,” said Mark Zandi, chief economist at Moody’s Analytics.
Unemployed workers’ spending on food, clothes and other so-called nondurable goods immediately drops 12%, about twice as much as when they lost their job and went on unemployment insurance, University of Chicago researchers have found.
Spending at drugstores falls 15%.
Copayments for visits to the doctor fall 14%. Spending on groceries falls 16%, or $46.30 a month, on average.
Millions of Americans are less than two weeks from cutbacks like those. The last two federal emergency unemployment programs in the CARES Act, passed as the pandemic’s first wave surged in March, expire Dec. 26.
An analysis by the Century Foundation concluded that 12 million workers who rely on one or the other of these programs will lose them on that day.
This will add to 4.4 million who will have already exhausted their federal unemployment benefits.
It projected that fewer than 3 million of these workers will be eligible for what are known as extended benefits, which kick in when the unemployment rate in a state is exceptionally high and can last six to 20 weeks, depending on the state.
If Congress and the administration are unable to hammer out a deal to provide additional relief, the others will be left with nothing.
“It was obvious this would be totally inadequate,” said Stephen Wandner, an expert on unemployment insurance at the Upjohn Institute for Employment Research, who has argued for extending unemployment benefits for a longer period, especially at a time when jobs aresohardtocomeby.
Wandner noted that unemployment benefits lasted up to 99 weeks — almost two years — as part of the recovery effort in the last recession. In 2003, when the nation was also recovering from recession, maximum benefits were extended as long as 72 weeks, or almost a year and ahalf.
Joblessness will not only affect consumer spending.
Nearly 12 million households fear they may not being able to meet their mortgage payments, according to a survey in October by Moody’s Analytics and Morning Consult.
Millions of others can no longer afford their rent.
And 37% of the unemployed said the coronavirus pandemic prevented them from looking for a job.
“You are really putting coal in people’s stockings,”
Wandner said.
At the end of November, 16 million reported they had not worked in the last seven days and were relying on unemployment insurance payments to make ends meet, according to a Census Bureau survey of Americans’ financial condition.
Losing those checks will translate into immediate hardship.
“Come Jan. 1, a lot of people are going to be on DEFCON 1,” said Mark Zandi, chief economist at Moody’s Analytics.
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