The end of both Pandemic Emergency Unemployment benefits programs on Labor Day comes at a point when some 12-plus million Americans are on unemployment benefits and 9-plus million of those are on the federal emergency programs being ended (5.41 million on Pandemic Unemployment Assistance and 3.80 million on Pandemic Emergency Unemployment Compensation). This situation — high real unemployment and 75% of the unemployed receiving federal rather than regular state benefits — has persisted for six months, while the total number of people on all kinds of benefits has come down only from roughly 14 million to the current 12.2 million. After more than $750 billion spent on these benefits, their cutoff threatens an eviction wave of millions of households.
This has occurred while the labor market has been continuously reported as “tight” with more job openings than job seekers, wages have risen steadily, and some states have ended the federal emergency unemployment benefits to try to force people back to work. This has not worked, only about one-eighth of people cut off benefits have found work, only 7% of benefits lost have been replaced by new wage earnings.
The reality is not mysterious, given the complete lack of any national productive job creation mission or program over the entirety of the past 18 months’ economic collapse, the huge cash relief legislation passed (though big chunks of that federal cash has not been used even now), and the more and more inflationary “recovery.” Of the continuing deficit of 6.5 million jobs in the U.S. economy relative to February 2020, some 5.6 million were non-productive, largely “informal employment,” “gig jobs” and the like, the majority held by Americans who had not completed a college education. These people are most of those still on the emergency benefits which end today. Those jobs are not about to return soon. The 235,000 new jobs reported in August, though taken by President Biden as “a poor result,” simply represented the normal level of job gains for August in the five years prior to 2020.
Secondly, inflation has outpaced the wage gains so widely discussed – except for the best-paid categories of white-collar work — and average real weekly wages have declined over 2021 thus far. The millions still on benefits thus have not been “turning down better jobs than they had.” Inflation is fastest on the essentials, shelter and motor vehicles, and the rapid shelter inflation hasn’t yet been factored into price indices and real wage calculations at all.
