Republicans Set Up An Unemployment Cliff

Written by SK Ashby

Last week, the number of new, initial claims for unemployment fell below 800,000 for the first time since the coronavirus pandemic began, falling by about 55,000 compared to the previous week, but there's a much bigger problem on the near horizon.

While brand new claims dropped by 55,000, the number of people filing claims for long-term unemployment only covered by the federal government increased by over 500,000.

People who've lost their jobs are being shuffled from state programs to the federal program and the big problem is that's going to expire very soon without congressional action.

From Reuters:

The number of people receiving benefits after an initial week of aid declined 1.024 million to 8.373 million in the week ending Oct. 10, the lowest in nearly seven months.

At least 3.296 million workers filed for extended unemployment benefits in the week ending Oct. 3, up 509,823 from the prior week. Economists said claims for extended benefits, which expire in December, were understated.

“Today’s report does not include 600,000 recipients in Florida listed on the state’s dashboard, as well as workers in major states like Washington and Texas who report delays of up to one month between programs,” said Andrew Stettner, senior fellow at The Century Foundation in New York.

Unless Republicans in Congress agree to terms for another stimulus package, some 8 million people may lose their last lifeline in December.

But many people could lose benefits before that point if there's a one month delay between transferring from state programs to the federal program. In that case, people in Florida or Texas, for example, will effectively see their benefits expire in November, rather than December, because the program will expire before their claims are even processed in the following month. This reminds me of Trump's fake unemployment program administrated by the Federal Emergency Management Agency (FEMA) which effectively expired two months before some people saw a check from it.

It feels like it should be clear by now that the way we handle unemployment in this country is really not designed to handle anything other than full employment in a growing economy where plenty of jobs are available. And our system doesn't function very well even in those cases which only occur once per decade before another Republican administration destroys everything.

There's a lot of things we'll need to rethink when the pandemic is finally over, but I think the next administration or a future one should make the case that the federal unemployment program should be permanent and that we should use it to establish a limited form of guaranteed income, at least to start with.

If Republicans actually allow the program to expire in December, the case for doing that will become stronger when we see what happens when 8 million people lose their only spending money all at once. If you're a business owner or just work at a business that depends on regular customers, you should want to see people with more money in their pockets to spend at your business. That's why the CEO of Wal-Mart, among others, has urged Congress to pass more stimulus. But Republicans don't care. They're ideologically land-locked.