Millions of Americans will fall off an ‘income cliff’ when extra $600 in unemployment benefits ends next month

Millions of Americans will fall off an ‘income cliff’ when extra $600 in unemployment benefits ends next month
Share

Tens of millions of Americans who lost their jobs because of the coronavirus pandemic have been able to collect an extra $600 in weekly federal unemployment benefits over the past few months on top of the standard amount given by their state. For many households, the enhanced benefits have been a financial lifeline amidst record job loss and a burgeoning recession.

But on July 31, that enhanced benefit will end — and that could have dire consequences for millions of households.

Coupled with other coronavirus relief measures, the extra $600 in enhanced benefits has helped many Americans stay afloat — and even save more than usual — throughout the pandemic, with some economists calling it the “best” part of the economic response to the coronavirus. The $600 increase has been “one of the most effective parts of the CARES Act on both humanitarian and economic grounds,” writes Heidi Shierholz, an economist at the Economic Policy Institute, a left-leaning think tank.

Ending the benefits now would  be a “terrible idea,” Arindrajit Dube, an economics professor at the University of Massachusetts Amherst, said in a tweet. Many households have already spent the one-time stimulus check they received and unemployment is expected to remain high through 2021. Without the extra $600, benefits will revert to the standard state amount, which averaged $378 per week in March. That’s a sudden income reduction of 60%, without another stimulus check to fall back on.

“It would cause pain among millions of families, drive down economic activity and impede our recovery,” writes Dube.

Source: CNBC

Submit a Comment