As expanded unemployment aid expires, what’s next for residents?

DOVER — Congress’ failure to agree to a coronavirus relief deal means the tens of thousands of Delawareans receiving expanded unemployment benefits are losing a large chunk of their weekly payments.

Expanded unemployment benefits from the federal CARES Act ran out Friday, causing a loss of $600 a week for millions of Americans. The expiration comes amidst news the second quarter of 2020 saw the worst economic contraction in history and with unemployment at levels not approached since the Great Depression.

One out of every eight Delawareans in the workforce was unemployed last month, a statistic that illustrates the devastating impact of COVID-19 and the resulting shutdown.

As of late July, about 95,000 people had applied for unemployment benefits in Delaware, with around 70,000 receiving payments. (Some of those who have not been paid have their claims still processing through the system.)

“Essentially each one of those folks will go back to whatever their state weekly benefit amount will be, which is up to $400, though the average person probably receives about $270 a week in state benefits,” Labor Secretary Cerron Cade said.

Unless Congress acts, payments made last week were the final ones that will include the $600 benefit. Individuals with a pending claim in Delaware who are later found to be eligible for benefits will receive the supplement when their claim is paid, according to the Department of Labor.

Other unemployment benefits, including expanding the eligibility to independent contractors and self-employed workers, will continue.

The CARES Act also included a moratorium on rental evictions, which expired Friday. Delaware currently has a stay on evictions and foreclosures under one of many executive orders from Gov. John Carney.

While many Americans still harbor hopes Congress will approve additional funding, a chasm separated the two parties as of Friday. Though the Democratic-controlled House approved an extension of the benefits back in May, the Republican-led Senate has balked at doing so.

Democrats were seeking an extension on the $600 benefit, among other government aid. Republicans have favored limiting the federal supplement to $200 a week, prompting continued clashes between lawmakers over government spending.

Exactly what the impact on Delaware will be if no agreement is reached in Washington may not be known, but it clearly won’t be good.

“There’s people right now who are trying to put food on the table, trying to pay their bills” and will be seriously hindered by the loss of $600 a week, Mr. Cade said.

Many households have been able to maintain their standard of living only because of those expanded benefits, University of Delaware economics professor Jim Butkiewicz noted. Coupled with the $600-a-week check, the state payment is enough for many people to live on — for now.

“On the other side, there’s this disincentive to work, but of course if jobs are shrinking and establishments are hesitant to reopen again, there is no work,” Dr. Butkiewicz said.

While some people actually made more on expanded unemployment than they were earning before the pandemic, potentially millions of Americans would be facing eviction and bankruptcy should those benefits vanish.

The shutdown has already been too much for some businesses, even if they don’t know it yet.

“Even if vaccines are effective there are jobs right now that are permanently lost,” Dr. Butkiewicz said. “Restaurants are permanently closed.”

It will take years for new businesses to pop up and fully replace old outlets, he said — and the longer the country fails to contain COVID, the longer recovery will take.

State Rep. Bryan Shupe, a Republican who owns two small businesses in the Milford area, said his doggy daycare and boutique went from 15 employees to five “overnight.” For him, seeing those folks struggling to make ends meet has underlined the challenges so many Americans face.

“I think most people want to go back to work. I think this vision that most people are saying, ‘Oh, I have $600, I don’t want to work,’ I don’t think that’s true for most people,” he said.

“I think most people want to go back to work. They have a purpose for what they do and want to get back to what they’re doing, but people are scared. They have the right to be fearful of the possibility of the spread of the virus.”

Commenters on the Delaware State News’ Facebook page offered a range of opinions on the subject of expanded unemployment, from people saying they did not care because they would not be impacted to others describing those same commenters as selfish and calling for Congress to provide more robust aid.

The White House on Thursday proposed a short-term extension of the $600 weekly unemployment benefit, but Democrats shot down the plan, arguing it offers too little.

In a statement, Rep. Lisa Blunt Rochester, a Democrat who serves as Delaware’s only member of the U.S. House of Representative, said Senate Majority Leader Mitch McConnell, a Kentucky Republican, “did not propose anything or negotiate in good faith, leaving millions of Americans in peril as federal unemployment insurance expires.” Still, Rep. Blunt Rochester expressed optimism about a solution, urging “leaders to put politics aside and rise to the occasion.”

Delaware’s junior senator, Chris Coons, has also criticized Republican lawmakers, noting the House bill has been before the Senate for two months.

“We are pushing out more spending to sustain our economy, to respond to this pandemic, than has been done federally since the Second World War,” he told Fox Business last week. “But what I hear from small business owners, from parents, from public employees, from folks that lost their jobs is that if it were not for this federal support, we would be in the Second Great Depression.

“So, there are 30 million Americans, roughly, who are relying on this $600 a week additional federal unemployment. The proposal that we’ve just seen from the Republican majority here in the Senate would make every person take a 30% pay cut who is currently relying on unemployment.

“One of the main challenges we face is antiquated IT systems at the state and federal level. Changing that so that we’ve got a more resilient, more adjustable system isn’t going to be possible on the fly in a couple of weeks. So, we’ve got to negotiate something that is responsible in this environment, and in my view that means extending unemployment for an awful lot of folks who otherwise won’t be able to keep a roof over the heads of their families.”

Some people have still not yet even received their benefits, largely due to the sheer number of applicants over the past five or so months.

Mr. Cade noted the agency must ensure applicants are eligible, which can take time. The department has brought on extra employees to handle the volume, he said, acknowledging it’s hard to tell people to just be patient when their livelihoods are at stake.
Once the country gets the virus under control, things can start to return to normal. Even then, however, it will take time for people to feel comfortable going out again, Dr. Butkiewicz said.

The longer the Trump Administration fails to treat the issue as a major problem, the longer the economic crisis will persist, to say nothing of the public health concerns, he said, echoing an opinion of many experts analyzing virus response and recovery.
With so much uncertainty, it is nigh impossible to even hazard a guess as to where the situation might stand in just four months’ time.

“Anyone who feels like they can accurately predict what the next couple of months are going to be like … that person deserves a book deal and some other recognition,” Mr. Cade said with a laugh.