Two anchors of COVID-19 safety net ending, affecting millions
Mary Taboniar went 15 months without a paycheck, as a result of the COVID-19 pandemic. A housekeeper at the Hilton Hawaiian Village resort in Honolulu, the single mother of two saw her working income vanish as the coronavirus devastated the hospitality industry.
For more than a year, Taboniar depended entirely on boosted unemployment benefits and a network of local food banks to feed her family. Even this summer as the vaccine rollout took hold and tourism began to resume, her work was slow to return, peaking at 11 days in August — about half her pre-pandemic workload.
Taboniar is one of millions of Americans for whom Labor Day 2021 represents a perilous crossroads. Starting Monday, an estimated 8.9 million people will lose all unemployment benefits afforded under the government’s COVID-19 protection package. A federal eviction moratorium already has expired.
While other aspects of pandemic assistance including rental aid and the expanded child tax credit are still widely available, untold millions of Americans will face Labor Day with a suddenly shrunken social safety net.
“This will be a double whammy of hardship,” said Jamie Contreras, secretary-treasurer of the Service Employees International Union, which represents custodians in office buildings and food service workers in airports. “We’re not anywhere near done. People still need help.... For millions of people nothing has changed from a year and a half ago.”
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For Taboniar, 43, that means her unemployment benefits will disappear — even as her work hours vanish again. A fresh virus surge prompted Hawaii’s governor to recommend that vacationers delay their plans.
“It’s really scaring me,” she said. “How can I pay rent if I don’t have unemployment and my job isn’t back?”
She’s planning to apply for the newly expanded SNAP assistance program, better known as food stamps, but doubts that will be enough to make up the difference. “I’m just grasping for anything,” she said.
President Biden’s administration believes the U.S. economy is strong enough not to be rattled by evictions or the drop in unemployment benefits. Officials maintain that other elements of the safety net, like the child tax credit and SNAP (which Biden permanently boosted this summer) are enough to smooth things over. On Friday, a White House spokesperson said there were no plans to reevaluate the end of the unemployment benefits.
“Twenty-two-trillion-dollar economies work in no small part on momentum and we have strong momentum going in the right direction on behalf of the American workforce,” said Jared Bernstein, a member of the White House Council of Economic Advisers.
Labor Secretary Marty Walsh said he believed the country’s labor force was ready for the shift.
“Overall the economy is moving forward and recovering,” Walsh said in an interview. “I think the American economy and the American worker are in a better position going into Labor Day 2021 than they were on Labor Day 2020.”
Walsh and others point to encouraging job numbers; as of Friday the unemployment rate was down to a fairly healthy 5.2%. But Andrew Stettler, a senior fellow with the Century Foundation, a left-leaning think tank, says the end of the expanded unemployment benefits is still coming too early.
Rather than setting an arbitrary deadline, Stettler says the administration should have tied the end of the the protections to specific economic recovery metrics. He suggests three consecutive months with nationwide unemployment below 5% as a reasonable benchmark to trigger the end of the unemployment benefits.
“This does seem to be the wrong policy decision based on where we are,” Stettler said.
The end to these protections while the economic crisis persists could have a devastating effect on lower-middle-class families that were barely holding on through the pandemic. Potentially millions of people “will have a more difficult time regaining the foothold in the middle class that they lost,” Stettler said.
Biden and the Democrats who control Congress are at a crossroads, allowing the aid to expire as they focus instead on his more sweeping “build back better” package of infrastructure and other spending. The $3.5-trillion proposal would rebuild many of the safety net programs, but it faces hurdles in the closely divided Congress.
In the meantime, families will have to make do.
“These are two very important things that are expiring. There’s no doubt that there will be families impacted by their expiration and that they will have additional hardship,” Sharon Parrott, president of the Center for Budget and Policy Priorities, said in an interview.
The COVID-19 response has been sweeping in its size and scope, some $5 trillion in federal expenditures since the virus outbreak in 2020, an unprecedented undertaking.
Congressional Republicans had supported some of the initial COVID-19 outlays, but voted lockstep against Biden’s $1.9-trillion recovery package this year as unnecessary. Many argued against extending another round of unemployment aid, and Republicans vow to oppose Biden’s $3.5-trillion package lawmakers are expected to consider this month.
There are still multiple avenues of support available, although in some cases the actual delivery of that support has been problematic.
States with higher levels of unemployment can use the $350 billion worth of aid they received from the relief package to expand their own jobless payments, as noted by an Aug. 19 letter by Walsh and Treasury Secretary Janet L. Yellen.
Federal rental assistance funds remain available, though the money has been slow to get out the door, leaving the White House and lawmakers pushing state and local officials to disburse funds more quickly to landlords and tenants.
Investment bank Morgan Stanley estimated Thursday that the economy will grow at an annual pace of 2.9% in the third quarter, down sharply from its prior forecast of 6.5%. That decline largely reflects a pullback in federal aid spending and supply chain bottlenecks.
And the economy still faces hurdles. Union officials says sectors such as hotel housekeepers and office janitorial staffs have been the slowest to recover.
“Our industry is the tip of the spear when it comes to COVID,” said D. Taylor, president of Unite Here, a union that represents hotel housekeepers, a field that is “primarily staffed by women and people of color.”
Many of those housekeepers never returned to full employment even as Americans resumed traveling and hotel occupancy rates swelled over the summer.
Taylor said several major hotel chains have moved to permanently cut down on labor costs by reducing levels of service under the guise of COVID-19. Taboniar’s hotel in Hawaii for example has shifted to cleaning rooms every five days unless the guest specifically requests otherwise in advance. Even as the hotel was at more than 90% occupancy in August, she was employed only for half her usual pre-pandemic number of days.
The Delta variant of the coronavirus also poses a challenge, threatening school closures and the delay of plans to return workers to their offices.
Walsh called the Delta variant “an asterisk on everything.”
The sudden lapse of a crucial element of the pandemic safety net has fueled calls for a reevaluation of the entire unemployment benefits system. Sen. Ron Wyden (D-Ore.), the chairman of the Finance Committee, said in an interview it’s crucial that Congress modernizes the unemployment insurance system as part of the package.
“It’s heartbreaking to know it didn’t have to be this way,” Wyden said.
One of the changes he proposes is to have jobless benefits more linked to economic conditions, so they won’t expire in times of need. “We got to take the unemployment system into the 21st century,” he said.
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