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Qiana Jones’ catering business, founded in late 2018, really took off last year. But when the coronavirus pandemic hit in early 2020, Jones was forced to return $15,000 worth of payments for canceled events, sending her bank account into the negative.
Jones did not receive her unemployment insurance until the week of July 4. Two weeks before she was paid, she was handed a 60-day eviction notice and moved in with her brothers.
“I’m 48 and sleeping on an air mattress in a living room, and I'm trying to find a place now,” Jones said through tears. “It’s difficult. It’s really hard.”
Jones is among the 12.5% of Delawareans who are unemployed as of June. For some, the $600 per week enhanced employment benefit is all that is keeping them afloat. But with those benefits due to expire at the end of the month, many Delawareans who still cannot return to work are wondering how they will go on.
The CARES Act, which Congress passed in late March, allotted a $600 per week bonus for people who lost their jobs to the coronavirus pandemic. However, these payments are set to expire on July 31, after which unemployment benefits will revert back to nonpandemic standards.
Delaware recently announced additional extended unemployment benefits, meaning that people who qualify can continue to receive state unemployment insurance for 13 weeks after they exhaust their previous state unemployment benefits. In Delaware, people who qualify can receive anywhere from $133 to $400 per week from the state.
What we know about the next stimulus package
The Senate's stimulus package will almost certainly reduce the $600 per week benefit. Republican senators have criticized the bonus as too generous, believing it creates a disincentive for people to return to work. The federal bonus on top of regular state unemployment is indeed well above what many Americans earn at their regular jobs.
Senate Republicans were expected to unveil their planned stimulus package this week, but were unable to agree on its details. It is now being pushed to next week. The bill is expected to reduce extended unemployment benefits to $200 per week and include another $1,200 one-time stimulus payment. The package is also slated to include a $450 cash return-to-work bonus and liability protections for businesses.
Sen. Chris Coons said Senate Democrats support the HEROES Act passed by the House of Representatives on May 15, which extends the $600/week bonus until the end of the year.
“I don't think in the middle of a recession and an ongoing pandemic is the time to cut people loose,” Coons said.
“I think we need to find some combination that provides an incentive for returning to work but also continues to support people who are unemployed given that lots of businesses are closed or are not likely to reopen in the short term.”
Congress must come to an agreement on the stimulus package before Aug. 7, after which it will break for summer recess. Republican senators and Congress members have not begun discussion with Democrats on the package, meaning there is still a ways to go before they pass a bill and money arrives in the pockets of unemployed Americans.
A grim economic forecast
Delaware added around 20,000 new jobs in June according to Tom Dougherty, chief labor market economist at the Delaware Department of Labor. Still, Delaware has lost around 49,300 jobs since the beginning of the pandemic.
Almost 39,000 Delawareans are currently receiving unemployment benefits, Dougherty said, up from 4,556 in March. Further, on Thursday the U.S. Department of Labor announced the first increase in weekly unemployment claims since April.
Although Republican senators are advocating for workers to return to their jobs, it will take a while to replace all the jobs lost to the pandemic, according to Jim Butkiewicz, University of Delaware economist. He expects that even with the best-case scenario of a vaccine available by the end of the year, it will take the economy a year or more to recover.
People like Jones won't be able to return to work any time soon. Her catering business can’t make money while people continue to avoid large gatherings.
“I still think [with a vaccine by the end of the year] it would take a year or two or more to get the economy fully back,” Butkiewicz said. “[Businesses] that have been permanently lost, it's gonna take some time for new businesses to replace those.”
"The real tragedy, the greatest tragedy, is all the lives that are lost," he continued. "But the next greatest tragedy is the jobs that probably have been permanently lost."
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The reduction, or end, of extended unemployment benefits could have broader consequences for the American economy, too. Nationwide, the extended unemployment benefits inject billions of dollars into the economy every week. If they are abruptly cut off, the U.S. gross domestic product could shrink by 2% and the U.S. could lose 1.7 million more jobs, according to economist and former Treasury Department official Ernie Tedeschi.
Also, the moratorium on evictions from the CARES Act is set to expire on Friday, July 24. With unemployment income cut off and millions of Americans still unemployed, some experts predict an eviction and homelessness crisis on the horizon.
Delaware's unemployed left in limbo
Hillary Blatt owns her own business, too, which has taken a major hit due to the coronavirus pandemic — she sells jewelry and accessories to museums and retail outlets. She has been receiving the $600 bonus from the federal government, but when that money runs out, she is unsure how she will pay her bills with state unemployment money alone.
“What am I gonna do?” Blatt said. “I put 25 years into my business.”
And with many brick-and-mortar businesses permanently or temporarily closed, some workers don’t have the option to return as the state relaxes coronavirus restrictions.
Richard Selfridge worked at the Subway sandwich shop on Tatnall Street in downtown Wilmington. With hardly any foot traffic downtown as office workers pivoted to work from home, the shop was forced to close for good in mid-March.
“I pretty much have nowhere to go as far as working goes,” Selfridge said. “People just aren’t hiring.”
While the unemployment benefits are keeping Selfridge afloat for now, he worries about what will happen if the $600 is reduced or eliminated. He won’t be able to afford his expenses on social security and state unemployment alone.
A return-to-work bonus doesn’t make much sense for food service workers either, he says, because there are so few jobs available for them.
“I recognize the 600 cant go on forever, I understand that,” Selfridge said. “But
I've said to people, maybe they’ll finally realize that the minimum wage is not a living wage.”
“Certainly a lot of these people are making more than they were [before enhanced unemployment benefits], because they were working for peanuts.”
Blatt, too, refutes the idea the unemployment benefits are discouraging workers to return to their jobs.
“These are not slackers,” Blatt said. “Some of them did go back [to work] and then they had to shut down again.”
While the CARES Act passed unanimously in a scramble to throw the American economy a lifeline in the early days of the pandemic, the next stimulus package is facing many more setbacks. As Washington stalls, Delaware's unemployed are left wondering when or if they will receive their next federal paycheck.
Next month, if Congress does not act to extend unemployment benefits, Jones will receive just $210 a week from the state.
"Even if the $600 gets reduced, it’s something ... it's something I can work with," Jones said. "But if they don't add anything on top of [state unemployment], then I am going to be screwed."