/Insulin or groceries: How reduced unemployment affects struggling Americans from California to Mississippi

Insulin or groceries: How reduced unemployment affects struggling Americans from California to Mississippi

Christopher Bolei is worried about how he’ll make ends meet now that the $600 federal unemployment benefit is cut off. 

In March, Bolei, 63, who lives in San Rafael, California, was laid off from his job as a maintenance supervisor at a startup that manages real estate properties. After falling behind on rent, he fears he’ll get evicted as rent moratoriums expire. 

For the past three months, he’s missed his nearly $3,000 monthly rent payment due to growing medical costs for his partner. She has lupus, an autoimmune disease, and faces $30,000 in medication costs this year to treat a brain injury following a car accident. 

“We’re struggling. It’s been really stressful. That extra $600 is barely keeping us afloat,” says Bolei, who had been receiving about $4,200 a month in benefits with the additional weekly $600. In California, state unemployment maxes out at $450 per week.

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Christopher Bolei, 63, lives in San Rafael, California.

Millions of struggling out-of-work Americans are in limbo after the additional $600 in weekly unemployment benefits expired at the end of July, leaving many fearful of how they will survive and pay their bills without the extra jobless aid. 

Unemployment benefit extension?

Last week, Senate Republicans released a $1 trillion proposal for another coronavirus stimulus package, dubbed the Health, Economic Assistance, Liability protection, and Schools Act, or HEALS Act. One of the controversial aspects of the plan would reduce the unemployment bonus from $600 to $200 through September, and then cap federal jobless assistance to 70% of workers’ pay moving forward.

The Democrats want to extend the weekly $600 federal unemployment bonus through January, and rejected a short-term deal to continue the bolstered aid for one week.

President Donald Trump, meanwhile, has split with some of his GOP allies and softened his opposition to an extension of the $600 boost. 

“We want a temporary extension of enhanced unemployment benefits,” Trump said at the White House Thursday. “This will provide a critical bridge for Americans who lost their jobs to the pandemic through no fault of their own.”

The GOP’s bill, which would cut enhanced unemployment benefits by $400 per week, or by two-thirds, would have dire consequences for more than 25 million people currently out of work and receiving the emergency income boost, according to The Century Foundation, a nonprofit think tank. Under the plan, weekly benefits would drop from a national average of $920.68 per week to $520.68 per week.

The Senate Republican proposal to reduce the weekly $600 supplement to $200 threatens to lead to 3.4 million fewer jobs created over the next year, according to the left-leaning Economic Policy Institute.

“Washington is playing Russian roulette with the economic recovery,” says Andrew Stettner, a fellow with The Century Foundation. “We can’t seem to control the virus and lots of people still haven’t been called back to their old jobs. But we have done a lot to keep the economy steady. The key to that has been generous unemployment benefits that have allowed people to continue to pay their bills.”

People in states with lower average unemployment payments could see their weekly benefits drop by as much as 57%, data from The Century Foundation shows. Many states that face spikes in coronavirus cases would experience the largest percentage reduction in benefits, including Florida (47.1%), California (44.2%) and Mississippi (50.5%).

The clock is ticking 

Experts say Congress must act quickly because many Americans don’t have a financial cushion. The labor market is facing a net loss of 14.7 million job losses from the coronavirus recession. Jobless claims remain historically high and permanent job losses are growing, a troubling sign for the labor market as the extra unemployment aid expires. 

Reinstating the extra jobless benefits could create an “administrative nightmare” for state unemployment agencies, where recipients could face a lapse in aid of two to four weeks even if benefits are reinstated right away, according to the Economic Policy Institute.

State agencies could also face challenges trying to reprogram their systems for the GOP’s 70% wage-replacement plan, experts say. 

“Most state agencies don’t have enough resources or the technology to agilely respond to this,” says Heidi Shierholz, senior economist and director of policy at the Economic Policy Institute. “Policy makers have chosen not to invest in them for decades. We set them up to fail.” 

Some worry about how a wage replacement will be calculated

Critics of expanding unemployment insurance argue that the extra money discourages Americans from finding new work, especially since many low-wage workers in hard-hit industries like restaurants and retail have received more money in unemployment. But white-collar workers who had been relatively less affected at the onset of the pandemic may now be more exposed to permanent layoffs, economists say. 

Adding to the concern, even an additional $600 per week doesn’t achieve full wage replacement in some high-cost cities like New York City, San Francisco and Washington.

To combat this, the Heritage Foundation, a conservative think tank, has called on policymakers to propose a 40% federal match, boosting a typical state benefit, which is usually between 40% and 50% of a jobless person’s prior earnings, to between 56% and 70% of previous earnings.

Still, Thomas Darnell, 48, of West Point, Mississippi, is worried about how the government will calculate the additional unemployment benefits in the future. If it’s 70% of his prior wages, like the GOP is proposing, he’s concerned it will be based on his income in 2019, which was less than his wages in 2020 because he was temporarily unemployed last year. 

For him, the health and economic repercussions from the pandemic hit close to home. Darnell, who was an assembly line worker at a diesel engine manufacturing plant, has worked in factories for over 20 years, but can’t find a job.

First, he was furloughed for three weeks in April and then laid off in May. Then things got worse: His entire household of seven, including himself, his wife, three kids and daughter-in-law, along with his baby grandson, contracted coronavirus after they saw their immediate family over the Independence Day weekend.

“I’m tired and shaky. Even after a few weeks, I’m still trying to recover,” Darnell says, who has since been cleared of the virus but still has lingering symptoms. “One of my biggest fears is trying to find a job, but being stuck quarantined at home. If a potential employer calls me for an interview, will my name be pushed off the list because I’m sick?” 

Facing eviction 

The GOP’s latest stimulus proposal doesn’t include an extension for federal eviction moratoriums, which had protected millions of renters living in buildings with federally backed mortgages from losing their homes during the pandemic. One in five of the 110 million Americans who live in households that rent are at risk of eviction by the end of September, according to the Aspen Institute, a nonprofit think tank.

“A lot of people don’t have very much in savings,” Stettner says. “Unemployment benefits have helped them pay their bills. But when you start taking that away, we could begin to see the same housing risks that we saw during the Great Recession. People are being forced to move in with their families, or they’re living out of a car.”

About 42% of Americans reported that they felt somewhat-to-very financially unstable, according to a recent survey from consumer finance company Credit Karma. Nearly one-quarter of those who felt financially unprepared for the current economic situation felt this way because they didn’t have a savings cushion. 

Nearly a third of Americans somewhat-to-strongly disagree that the government is doing enough to help people financially during the pandemic, even with the additional $600 in unemployment benefits. If unemployment benefits shrink, it’s likely this number will increase, experts warn. 

Darnell of Mississippi, for instance, isn’t facing eviction or foreclosure, but he still owes property taxes on his home. He was forced to dip into his 401(k) this year for the third time since 2017 to support his family. 

Mississippi is among states with the lowest weekly benefit maximum in the country at $235 per week. With the additional $600, Darnell was making about the same as his prior weekly wages, he says. Now, he fears what will happen as the bonus ends.

“If we lose that extra money, it’s going to be impossible to survive,” Darnell says. “Hopefully, I can retire one day, but I don’t know if that will ever happen.”

He can’t afford health insurance, which has added to his anxiety because he and his wife are both diabetic, he says. Like Bolei, Darnell and his wife have been forced to make a grueling decision between either paying for their medications or keeping food on the table.

“Do we buy insulin or groceries? It’s a hard juggle,” Darnell says. “I’m willing to make less money and start working again to get health insurance, but no one is hiring.” 

The positions he’s applied for pay between $10 to $14 an hour, he says. He was previously making $17 an hour.

“People aren’t just sitting on unemployment. We’re trying to find jobs. There’s just not a lot of work down here,” Darnell added. “I hate to depend on the government, but I don’t have much of a choice.”

Sinmi Araoye, 33, sitting outside in Boston, Massachusetts, in September 2019.

Others have found temporary work

Sinmi Araoye of Medford, Massachusetts, aspires to live the American dream, but she keeps running into obstacles. Araoye, who grew up in Nigeria, worked as an Uber driver to help put herself through nursing school at the University of Massachusetts Boston.

She has a bachelor’s degree and holds two master’s degrees — one in international fashion retail and the other in management and marketing — yet she still couldn’t find a better-paying job. After working at department stores and grocery stores making between $10 to $16 an hour, she decided to pursue a fourth degree in nursing.

When the economy shuttered in the spring, Araoye filed for unemployment. The extra $600 and the state benefits kept her income on par with what she was earning before the pandemic. Now that the bonus has expired, she can’t afford to live off of state benefits alone, she says. 

“It’s going to be hard,” Araoye says. “I don’t have steady income. I felt ashamed. I felt like I failed.”

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Massachusetts provides one of the most generous jobless benefits nationally, with maximum state aid reaching $823 per week for individuals. But Araoye qualified for only $265, she says, which doesn’t cover her $1,500 rent. 

Araoye, 33, is starting a temporary job with the U.S. Census Bureau as an enumerator, where she’ll go door-to-door to collect household and demographic information. She’ll be making $27 an hour, but it lasts only six weeks. She doesn’t know what she’ll do for money when the job ends, she says. 

“I’m grateful for a job because it’ll give me a financial lifeline, but I’m worried that I’m putting myself in harm’s way,” says Araoye, adding that she doesn’t feel comfortable returning to Uber until outbreaks are contained.

“There’s no good alternative,” she says. “I don’t really have a choice.” 

Jeffrey Drew, 43, last year in Tampa Bay, Florida.

Some people are living with family again

Jeffrey Drew, 43, suffered delays getting his unemployment checks. After applying in April, he waited for months until his money started trickling in by the summer. 

Drew, who lives in Sun City Center, Florida, moved from New York last year in hopes that he could transfer to the same internet provider he had worked at for about three years. When that didn’t pan out, he took a job as a line cook at a sandwich shop. 

When he was laid off in early April as the pandemic hit, he applied for unemployment, but months went by without any money. With bills piling up, he was forced to turn to his mother for help to pay his $300 car payment and $100 auto insurance. 

“It’s been a nightmare,” says Drew, who worries about contracting the virus in Florida, a pandemic hot spot, since he lives with his 76-year-old mother. “It’s scary. I got in a car accident and I’m struggling to pay for the repairs.”

In mid-July, he eventually got paid just over $6,500 in back unemployment. But once the weekly $600 benefit expired, he qualified for only $125 a week in state benefits, he says. In Florida, the state unemployment maximum is $275 a week.  

“It’s going to hurt. That extra money helped keep the bills paid,” Drew says. “I still haven’t found a job.”