As painful as the COVID-19 recession has been for many Americans, the abrupt downturn could have been far worse. And perhaps the smartest action taken by the federal government so far has been those expanded unemployment payments made possible by the Coronavirus Aid, Response and Economic Security (CARES) Act. In Maryland, for example, the payout has been exceptional (if not always easily navigated by applicants). State officials estimate that from March 9 to June 20, unemployment payments in Maryland totaled $3.3 billion of which $1.3 billion comes from Pandemic Unemployment Assistance for folks who wouldn’t have otherwise qualified for any form of assistance. Another $46 million went to people who had already exhausted their normal 13 weeks of benefits.
That’s a major reason why the record high unemployment rate in the United States of 13.3% doesn’t really feel quite as disastrous as that number suggests. Families have been kept afloat, landlords have been kept in business, grocery stores and other essential merchants are doing a brisk trade, and even the stock market, while an imperfect economic barometer, is roughly where it was valued last August. In other words, of all the failings of Washington during the pandemic from its initial laxity to its bizarrely muddled message on testing and mask-wearing, the CARES Act, and particularly those $600 unemployment booster checks, have been one thing that Democrats and Republicans did not get wrong.
Now, here’s the problem: The bottom of that is about to fall away.
First up are those $600 expanded benefits checks. They are due to stop coming on July 26 at the latest. And while clearly that benefit can’t be maintained forever (at least not without the means to pay for it), ending them in a month looks like a terrible idea. It would be one thing if the coronavirus pandemic were definitely over or at least contained, but the latest numbers are alarming. Although Maryland has seen many of its key measures fall, other states are going in exactly the opposite direction. The number of new cases overall has been rising since mid-June with states like Arizona, Florida and Texas becoming the latest hot spots. And it’s not just new cases, positivity rates and hospitalizations are up as well. And that’s caused some states to impose new restrictions to improve social distancing. Yet, even with those orders, some project U.S. COVID-19 deaths will rise significantly in July.
That worsening health outlook combined with the loss of unemployment insurance income for millions of Americans could prove a disastrous 1-2 punch. Given that reality, Congress ought to be moving forward with some sort of extension to reassure Americans (and the markets) that the federal government still has the economy’s back. Yet many Republicans continue to moan and groan about how those $600 payments are a disincentive to work. As if everything would be peachy if the federal government would simply be a bit more heartless to those who have lost their jobs through no fault of their own. This is absurd. Just look around. The job market remains horrible. It’s not laziness that’s keeping hospitality industry workers at home, to name one glaring example, it’s the way their industry is in ruin at the moment.
The harm that abrupt end in unemployment benefits hasn’t been lost on the Federal Reserve which last week issued a report that included a warning of the hardships ahead for millions of families once the supplemental unemployment benefits expire. It noted, for example, that low-income communities (such as large swaths of Baltimore) and minority communities (such as Baltimore’s) have already been hit hardest by the pandemic. Yet it’s the way the outbreak is growing worse in red states like Texas and Georgia as well as the swing state of Florida that may yet get the Trump administration’s attention.
No doubt there are some individuals who are, in fact, bringing home more money with more generous unemployment benefits than they did when they were working. But so what? This isn’t forever, and we don’t hear Congress making the same complaints about far greater (and usually more permanent) windfalls when it hands out lucrative tax avoidance schemes to billionaires. And unlike the super rich, the working poor (no matter their current job status) can be relied to spend those dollars right back in their communities by spending them on such things as the utility bill or perhaps food, all of which create millions of jobs. Expanded unemployment benefits represent a safety net that’s working right now. July is not the month to drop it.
The Baltimore Sun editorial board — made up of Opinion Editor Tricia Bishop, Deputy Editor Andrea K. McDaniels and writer Peter Jensen — offers opinions and analysis on news and issues relevant to readers. It is separate from the newsroom.