Extra Benefits
At the start of the pandemic through July 2020, the federal government buttressed unemployment payments by $600 a week on top of ordinary benefits. The extra federal checks fell to $300 a week for more than a year afterward. Freelancers and the self-employed were eligible too, despite ordinarily missing out of jobless benefits.
The payments were so generous they set off a red state-blue state debate over whether they allowed Americans to sit home, collect unemployment and avoid looking for work. Some economists have also said the benefits, coupled with stimulus checks sent to households, contributed to the highest inflation rate in more than 40 years in 2022. The Federal Reserve has raised interest rates 11 times since early that year to stem the rise.
Nowadays, low unemployment means it’s easy for state legislators to push the issue to the back burner, said Michele Evermore, a senior fellow at the Century Foundation, a progressive think tank.
“States know they can keep up a race to the bottom for regular benefits, because the federal government will probably jump in and save claimants in an emergency period,” Evermore said.
Researchers who track unemployment benefits say the US faces a reckoning if the nation falls into recession, which many economists still expect. The number of people applying for recurring unemployment benefits hit a two-year peak in mid-November, backing off only slightly since then, suggesting it’s taking people longer to find work.
Heather Hammond, 38, lives in central Michigan with her husband and six kids. Until she was let go from a home warranty company in early October, Hammond was keeping up with payments, despite rent that’s almost 25% higher than two years ago, a weekly grocery check of about $300 and lingering bills from her recent wedding.
When she lost her job, she had to withdraw $6,000 from her 401(k) plan to help stay afloat, even with her husband’s stable manufacturing salary. She was able to preserve some of that retirement money after tapping her network of LinkedIn contacts to land a new job doing business development for a staffing firm by early December.
“We weren’t even sure we were going to survive,” said Hammond.
This article was provided by Bloomberg News.