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When the coronavirus epidemic hit this spring, the payment of government assistance provided a living raft to the millions of people who lost their jobs.
The raft of that life, however, is winding down, threatening to leave the unemployed in a dangerous situation as Washington leaders struggle to get a new package of help before the November election.
New research from the JPMorgan Chase Institute and the University of Chicago focused on 80,000 unemployed people shows the savings accrued when the government provided help is quickly depleted, leaving people like chemist Kate McAfee who are worried about their future.
“I still don’t have a job,” said McAfee, who was fired from his job outside Cleveland in April. “I have now spent my 26 weeks of unemployment here in Ohio and moved on to an additional 13 weeks of extended benefits from the federal government.”
Millions of Americans are in a similar situation as the pandemic downturn spreads.
The downtown Denver coffee shop where Terrah Burton works will try to reopen during the summer, but with little foot traffic from vacant offices nearby, it temporarily closes its doors again.
“I hang on to that word, ‘temporarily,'” Burton said. “To see so much slipping on our fingers in this community is hard.”
Throughout the spring and early summer, Burton and his partner made money, thanks in part to the extra $ 600 a week in unemployment benefits that Congress approved in March.
Burton remembered his surprise when he received his first unemployment check. This is almost double what he does in a coffee shop.
“I will accept it because I have worked hard all my life,” Burton said. “We were able to put in a little extra savings and pay some low fees. Our budget goes out. -bar is zero. ”
But for the unemployed, the picture suddenly changed once the extra $ 600 a week ended in late July.
McAfee, a chemist in the Cleveland area, saw his unemployment benefits cut by more than half, making his wife and their two children tired.
“We’re slowly eating up the savings we had from good times earlier this year and getting challenging now,” McAfee said.
Researchers at the JPMorgan Chase Institute, in collaboration with the University of Chicago, found that many of the unemployed managed to sock excess money between March and July as the government spent freely to prevent the downturn. The median family savings almost doubled at that time.
But researchers found that the unemployed began to run out of savings in August, burning up about two-thirds of the money they had squirreled in the past four months.
“The pillow wears thin, and we have not yet recovered all the jobs we lost,” said Fiona Greig, director of consumer research for the JPMorgan Chase Institute. “This is a critical time for unemployed workers.”
Job growth has slowed in each of the last three months. And as unemployment continues, nearly 1.3 million people have filed new unemployment claims last week.
Unemployed workers are spending less now than early summer. And their spending is likely to fall further especially since their new find has been exhausted.
Kelly Griffin, an IT worker in Massachusetts, saw her earnings drop nearly two-thirds once the extra $ 600 a week benefit ended.
“It’s hard,” Griffin said. “You don’t go out to eat. You don’t spend things unnecessarily. I scrimped and saved and started to panic. ‘Am I getting a job again?'”
Unfortunately, Griffin got a job offer, and he is set to start next week. But many others have not been lucky.
“I get annoyed when people say that the extra $ 600 keeps us from working,” McAfee said. “I don’t stop it from working. I want to go back to work and I want to have a job again.”
McAfee tries to earn extra money by sewing facemasks. But this is not a substitute for a regular paycheck.
“This is not a situation I want anyone to, to continue to get stuck in here without figuring out its end,” he said. “I don’t know when I will have a job again. I hope it is close. But until then there is constant stress for everyone.”