As a second, larger wave of the COVID-19 pandemic rages on, businesses continue to shutter and others are downgrading their business plans for 2021, making the nation’s economic recovery feel increasingly farther out of reach. In terms of unemployment, this week marks the thirty-eighth week in a row that new unemployment insurance claims were over one million. Rather than a V-shaped recovery that some were hoping for earlier this year—in which employment would fall and subsequently bounce back by the same amount—the U.S. economy is following a K shape, in which employment for some groups has bounced back, but has continued to slide for others.
While the unemployment crisis has been devastating for workers and their communities across the country, some have been hit harder than others. For example, while higher income earners have collectively recovered most of the jobs lost this year, lower income earners are still experiencing a gaping net loss. And due to existing racial and gender income inequalities, these job losses have hit women, Black, and Latinx workers the hardest—which means that, whenever unemployment benefits disappear, these workers and their communities disproportionately face another setback.
Now, with roughly 19 million workers currently eligible to receive unemployment insurance benefits, it is projected that at least 12 million of them will lose those benefits at the end of this year, due mostly to expiration of vital CARES Act programs: Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC). In addition to the workers facing that ciff, another 1.5 million workers have already exhausted their benefits, and up to 3 million more could exhaust them before the cliff—altogether making this cliff the largest loss of unemployment insurance benefits in U.S. history by far.
There is no official information on the demographics of the 12 million workers impacted by the benefits cutoff. But, using state-based estimates of how many workers will see benefits expire on December 26, and the percentage of claims going to different demographic groups in the most recent two months (September and October), it is possible to estimate the demographics of who will lose benefits. Using a weighted average of weekly benefit amounts for regular state UI and PUA to estimate how much workers will lose when benefits expire shows that:
- Approximately 6.2 million women, 2.3 million Black workers, and 2.6 million Latinx workers, will see UI benefits expire on December 26, 2020.
- This loss of benefits translates to a drop in monthly income amounting to approximately $6.6 billion for women, $2.35 billion for Black workers, and $2.9 billion for Latinx workers.
- Throughout the pandemic, from March through October, Black and Latinx workers have accounted for 18 percent and 13 percent of all continued claims, respectively. In September and October alone, however, both groups have accounted for roughly 20 percent of claims—reflecting the trend of recessions hitting people of color harder and for a longer duration.
Unless Congress acts, this dramatic cliff falls at the very same time as millions will face eviction, expiration of student loan debt relief, exacerbated food insecurity, paid leave, a continued lack of child care, and dwindling local services due to budget shortfalls.
The Impact on Women and Their Children
Women comprise an outsized portion of unemployment claimants, accounting for almost 53 percent of all continued unemployment insurance claims from March through June of 2020, but only 47 percent of the workforce. Given that, throughout the pandemic, more than 50 percent of ongoing unemployment claims have gone to women, we can say with some certainty that more than 6.2 million of the projected 12 million individuals losing benefits at the end of the year will be women (see Figure 1), with a resulting loss of approximately $6.6 billion in monthly wages for women across the country. This loss will only compound the disproportionate economic stress women endure due to loss of work throughout the COVID-19 recession, historical gender wage and wealth gaps, and the inevitable reduction of working hours for many women due to a lack of child care. The number of women receiving benefits from PUA is significant, and absent reform to include all the workers who do not have W2s (gig workers, student workers, independent contractors, domestic workers, and so on), this category of workers may never again receive unemployment benefits.
Parents, and thus their children, have relied on UI benefits to get through this years’ hardships. According to data from the Census Household Pulse Survey, which asks respondents about their income sources used in the past week to meet their spending needs, 30 million adults live in households who point to UI as a key income source, and 14 million adults live in households who have kids and point to UI as a key income source. Another recent, yet-to-be-published analysis from the University of Chicago found that 41 percent of unemployed people in October 2020 who had lost their jobs have kids.
Even before the COVID-19 economic crisis, nearly one in ten children in America lived in deep poverty, although that figure was closer to one in five for Black children. The expiration of the $600 additional federal benefits at the end of July brought higher rates of poverty, and the December 26 benefit cliff will do the same if nothing is done to reverse it. While the exact number of kids that the cliff will affect is hard to estimate, it is clear that many millions of households—parents and children—will experience heightened levels of loss and deprivation if federal action is not taken to extend benefits.
The Impact on Hispanic and Latinx Workers
The pandemic-induced recession has been particularly hard for the Hispanic and Latinx community, due to pre-existing economic insecurity and inequality, lower wages, and fewer benefits. In particular, Latinas’ unemployment rate skyrocketed past 20 percent early on in the year—higher than for just about any other demographic group. Throughout the pandemic, Latinx workers have been overrepresented in terms of unemployment claims—consistently receiving more than 18 percent of claims, despite comprising around 17 percent of the workforce. In some large states such as California, Texas, and Arizona, Latinx workers have accounted for at least one third of all ongoing unemployment claims. And at the end of December, more than 2.6 million Latinx workers are projected to lose unemployment benefits, amounting to $2.9 billion in collective monthly loss to these workers and their families, and even more than that when accounting for the loss of that money throughout communities.
The Impact on Black Workers
People of color have borne the severest consequences of the COVID-19 health and economic crises due to decades and more of racist and discriminatory policies and institutions, and the pandemic has made this painfully obvious. The Black unemployment rate soared to nearly 17 percent in April, and months later has only subsided to just below 11 percent in October, while white unemployment rates fell to 6 percent.
The number of Black workers who have needed unemployment insurance has exceeded their share of the labor force throughout the pandemic, and have comprised a growing share of unemployment claims as the recession wears on. As of June, Black Americans received 16.4 percent of continued claims, compared to their 12.3 percent share of the labor force. And as of the latest data, it’s even more skewed, with 18 percent of all claims going to Black unemployed people from March through September. In California, CA Policy Lab projects that 8.4 percent of current Black regular UI claimants expected to lose coverage at the end of the year, substantially above the average of 5.7 percent among all groups and 5.5 percent among white workers. This disparity is in part because of the lower likelihood of Black workers being called back in to work, due to a mix of discrimination and occupational segregation that leads some into more precarious jobs—a trend that has plagued all recent economic recessions.
Black workers typically get the short end of the stick even in the size of their unemployment benefits. Alabama, Louisiana, and Mississippi, for example, have the highest percentages of claims filed by Black workers, and yet they also have some of the lowest benefit amounts in the country—with Mississippi and Louisiana being the only states to offer regular benefits below $200 per week. In fact, nationwide, there is an inverse relationship between the percent of claims going to Black people and the dollar amount of weekly unemployment benefits.
According to these estimates, more than 2.3 million Black workers will lose unemployment benefits at the end of December, leading to more than $2.3 billion in lost income per month that will ripple throughout Black communities.
As Congress sets its agenda for 2021, not only should it extend CARES Act programs, but many of its features should be permanent. All workers, despite their tax status, should be able to access unemployment benefits; people who leave work because they are sick or must care for sick family members should always be eligible for benefits; and these benefits shouldbe extended to cover undocumented workers, who are aggregiously left out of many federal and state programs.
While the dynamics of this crisis are different from those of the Great Recession, we know from past experience that, unless dramatic action is taken that targets the specific groups that are most vulnerable, these workers and their communities will only fall farther behind for the long term. The current economic crisis has the potential to cause even greater long-term harm, but ensuring unemployment benefits for the millions of women, children, and people of color who are currently struggling would be a great first step toward an equitable response.
header photo: People receive food at the Thessalonica Christian Church during a distribution site on October 17, 2020 in New York City. Source: Spencer Platt/Getty Images