Nancy Shields is among the millions of unemployed Americans who are losing their extended unemployment benefits starting this month.
Many like Shields depend on these meager payments, a federal extension of state unemployment programs that expired Dec. 28, to stay afloat. After tapping out their savings, downsizing their living space, and draining their retirement funds, one-time managers and MBA grads worry over what this new year will bring.
(Read more: Limbo on federal jobless benefits makes Congress the Grinch)
Earlier last year, the 59-year-old Shields lost her townhouse and now rents a single room in her Southern California town. At one point, she managed a team of 60 people for a large retailer. She lost that job in 2011 but took another one—and a 20 percent pay cut—some months later. When that store closed in 2012, her luck ran out, and she has been looking for work ever since.
"My federal [unemployment] benefits (were) about $1,200 a month, and that's all I get. … I have been very dependent on the generosity of my family members," Shields said.
Her retirement savings exhausted, Shields said she doesn't know what she'll do if Congress doesn't eventually authorize an extension. Congress returns to work on Monday and Democratic and White House leaders vowed Friday to make restoring the benefits program a priority.
The National Employment Law Project estimates that more than a million Americans are in the same situation. "For a lot of people and a lot of families, this is their only income source," said NELP federal advocacy coordinator Judy Conti. "This could pull the rug out from under 1.3 million families," she said. Without an extension, an additional 2 million will fall off the rolls in the first half of the year.
"Job opportunities are, by most measures, really no better than they were a year ago," said Heidi Shierholz, labor market economist at the Economic Policy Institute.
The improving unemployment rate is largely due to people dropping out of the labor force, and hiring hasn't budged from a year ago, she said. "The reason they extended it last year, that reason is still almost exactly the same right now."
Despite more than 25 years in the retail industry, Shields said the fact that she doesn't have a college degree makes landing a management level job challenging. "It's such an employers' market at this point. They seem to be more interested now in your education, if you've got a bachelor's degree, than they used to be," she said.
Higher education is no magic bullet, though. Abe Gorelick's Ivy League undergrad degree and MBA from the University of Chicago weren't enough to keep the 57-year-old Massachusetts resident off the unemployment rolls.
Gorelick said his family recently borrowed around $12,000 from his wife's sister, and that his parents as well as his brother had given them money over the duration of his unemployment. With three kids, two in college and one in high school, Gorelick said just covering their health insurance through COBRA cost around $1,200 a month, and January would bring with it new deductibles that would have to be met before coverage kicks in.
"I feel responsible for juggling every month and figuring out how the bills are going to get paid," he said. "There's just so many things to juggle and address … and spending as many hours as I can trying to find work."
Gorelick echoed a common refrain among the better-educated jobless: He's turned away from entry level positions because he's overqualified, but he can't find a job that matches his level of experience.
(Read more: )
"Their education does not help them get out of long-term unemployment," said Ofer Sharone, a professor at the Massachusetts Institute of Technology's Sloan School of Management. Sharone founded the Institute for Career Transitions to help older, white-collar workers get back into the workforce with mixture of career and emotional support. The longer people stay out of work, the harder it gets to find a new job, Sharone said.
"Once you become unemployed for more than six months, you pretty much fall into a trap," said Rand Ghayad, a visiting scholar with the Boston Federal Reserve and research associate at MIT.
Massachusetts resident Vera Volk also has a master's degree, but the 53-year-old biotech researcher lost her job at the end of May and has been selling prized possessions in order to stay afloat.
"We've had to cash in everything that we could potentially cash in," Volk said. "We've got our water heater down to the lowest we could potentially tolerate." Volk's extended unemployment benefits of $480 a week are the couple's sole source of income. They're four months behind on their mortgage, and although she and her husband have chronic health conditions, they couldn't afford to keep paying for health insurance.
The families receiving extended unemployment benefits are generally in dire financial straits, so helping them helps the economy overall, economists say. "Emergency UI has one of the largest economic bangs for the buck," Mark Zandi, chief economist at Moody's Analytics, said via email. According to Zandi's calculation, these payments have a multiplier of 1.49: For every dollar in extended unemployment benefits jobless Americans get, $1.49 goes back into the economy.
"Nobody wins when we leave people looking for work out in the cold," said Amy Traub, a senior policy analyst at advocacy group Demos. "It hurts the economy when local businesses can't rely on basic spending. … It strains the private safety net when food banks and charities have to serve more people," she said. "It slows down our recovery."
"In the next couple months, if I don't have that extra income coming in, there will have to be drastic cutting," said Chris Nitso, a 46-year-old Massachusetts retail manager who has been out of work since February.
"Ultimately, I need a job. I would have to resort to ... applying for jobs I wouldn't normally apply for or part-time jobs," Nitso said. "I'm going to have to be a sales clerk somewhere. … It definitely feels like a step back, for sure."
Increasingly, those are the only jobs out there. A National Employment Law Project study says nearly 60 percent of jobs created in the post-recession recovery pay $13.83 or less an hour. The Center for Economic and Policy research found that the number of low-wage workers with a four-year college degree nearly doubled between 1979 and 2011.
(Read more: How cutting benefits also will cut jobless rate)
"There seems to be more job seekers who are willing to take any job," Alexandria Vasquez, a lead researcher with the Institute for Career Transitions and Brandeis University sociology professor, said via email.
Writing in the National Review Online in December, Michael R. Strain, a resident scholar at the conservative American Enterprise Institute argued that extended unemployment benefits should be continued, writing that without them, "it's likelier that these workers will need other kinds of government assistance."
"We see people who run out of unemployment benefits get absorbed into other parts of the safety net program," Conti said.
This is the case for San Francisco resident Thadd Evans. He also holds a master's degree, but the 63-year-old has been unable to find a job since being let go from a market research position in March. With unemployment insurance his sole source of income, Evans said he had no choice but to apply for Social Security this fall, when he saw the writing on the wall and suspected that his extended payments might be terminated.
"My hope was at the last minute something would pop up and I'd be saved," he said. "But it didn't happen."
—By NBC News Contributor Martha C. White.