Matt Marfoglia was living paycheck to paycheck before the coronavirus pandemic. Now, while unemployed, he's barely scraping by.
The 51-year-old was furloughed from his job as a waiter at The Tasting Kitchen, a high-end Italian eatery in Los Angeles, in March.
The one thing that's kept him afloat: an extra $600 a week in unemployment benefits provided as part of a recent federal relief measure.
Even with the extra benefits, Marfoglia has been pocketing about $1,600 less per month.
But that aid will lapse after July, absent government action — potentially sending his income, and that of millions of other Americans, off a cliff amid the worst employment crisis since the Great Depression.
"To be honest, I'm terrified," Marfoglia said. "I'm right at the edge right now."
Marfoglia is one of nearly 30 million people currently receiving unemployment benefits, a figure well above any other period since the unemployment insurance system was created in the 1930s.
The crisis was spurred by the swift and unprecedented economic carnage wrought by Covid-19, which led to a virtual lockdown of the U.S. economy to halt spread of the virus.
The CARES Act, a $2.2 trillion relief package enacted in March, greatly expanded unemployment benefits, in part by tacking a $600 weekly enhancement onto traditional benefits paid by the states.
State benefits generally replace less than half a worker's prior take-home pay. The $600 enhancement aimed at fully replacing prior wages for the average worker (about $1,000 a week).
But not all workers are average — some make more and some less, relative to prior pay.
Researchers at the Becker Friedman Institute for Economics at the University of Chicago found that about two-thirds of workers eligible to collect unemployment insurance can receive benefits that exceed lost earnings.
Normally, it's not ideal policy for unemployment benefits to exceed job pay, according to labor economists, who said it may cause distortions in the labor market. Republicans have argued it could create a disincentive for people to return to the workforce.
Yet many believe it was good policy at the time, when the health crisis forced people to shelter in place rather than work.
Perhaps more important, antiquated state unemployment systems couldn't handle a change to their benefit formulas to ensure pay didn't exceed prior wages, according to economists and lawmakers.
That update would have delayed payments by weeks or even months, causing undue hardship for Americans relying on the aid to pay rent and food bills, they said — which ultimately pushed Congress to compromise on the $600 benefit, which was administratively easier.
States have struggled to pay claims even with the simpler formula. Some jobless workers went months without seeing one check.
Even now, three months after the lockdowns began, Eugene Scalia, the Trump administration's top labor official, refused to say during Senate testimony whether states would be in a place to cap benefits at 100% of individuals' prior wages.
The $600 in extra aid is scheduled to end after July 31.
Democrats want to extend it, but Republicans, emboldened by unexpected job gains last month, are unifying in opposition against it.
That complicates the situation for workers like Marfoglia, who can't yet return to work and depend on the enhanced benefits for their livelihood.
Marcus, a food server at a Boston-area Marriott hotel who was furloughed in March, would get about $300 a week from Massachusetts' unemployment system absent the extra benefits. (He requested his last name not be used for privacy concerns.)
Being on unemployment "isn't a wonderful gift to me," the 58-year-old said.
His state unemployment pay doesn't factor in tip income and is therefore lower than it would be otherwise. Massachusetts, among the most generous states, pays up to $1,200 a week to recipients.
"I'd survive [without the $600 benefits], but barely," Marcus said.
Research shows that a large share of Americans across all income bands were teetering on the edge of financial hardship even before the pandemic.
About 46% of people who make more than $75,000 a year live paycheck to paycheck or spend more than their means (via credit cards, for example), according to a Finra Investor Education Foundation report published in 2019. That's true of 62% who make between $25,000 and $75,000 a year, and for 70% of those who make less than that.
Democrats passed a bill in the House of Representatives that would extend the $600 benefit until early next year. They've also proposed gradually reducing the aid by tying it to economic conditions like a state's unemployment rate.
But Republicans want the policy to end after July, arguing that Congress should be promoting work over unemployment.
The economy added 2.5 million jobs in May, versus an expected loss of 7.5 million.
"Now we're facing a much different situation than we were in mid-March," said Sen. Chuck Grassley, R-Iowa. "States are reopening.
"Employment recently turned positive," he added. "We need to shift our focus to helping people safely return to work."
Some economists believe the risk of people not returning to work is overstated and that ending relief after July could cause undue financial hardship.
"It would cause pain among millions of families, drive down economic activity and impede our recovery," Arindrajit Dube, an economics professor at the University of Massachusetts Amherst, said in a tweet. "OK to modulate. Terrible to let expire."
Labor-supply incentives, while not irrelevant, may also be less of a concern during a pandemic than in a normal recession, according to the University of Chicago report.
Some Republicans are considering policy alternatives like a back-to-work bonus that would pay cash to those who find jobs.
The ability to return to work isn't necessary a given, though.
There are still 21 million people who remain unemployed.
The country's 13.3% unemployment rate, while lower than April's 14.7%, is still higher than at any period since the Great Depression.
The Federal Reserve estimates the unemployment rate will fall to 9.3% by the end of 2020 — still around where it was at the height of the Great Recession a little over a decade ago.
"This is the biggest economic shock, in the U.S. and in the world, really, in living memory," Federal Reserve chair Jerome Powell, a Trump appointee, said Wednesday. "We went from the lowest level of unemployment in 50 years to the highest level in close to 90 years, and we did it in two months. Extraordinary."
Job losses have disproportionately hit certain groups, such as Blacks, Hispanics, women and lower-wage workers harder.
Millions of workers currently on temporary layoff, or furlough, will likely lose their jobs permanently, and those industry jobs probably won't return "for quite some time," Powell said.
Among restaurants, there are 4.7 million fewer jobs in the "food services and drinking places" industry since February, according to the Bureau of Labor Statistics. That's despite the industry rehiring 1.4 million people last month.
Restoring the remaining jobs could be a tall order given social distancing guidelines and restrictions like capacity limits.
If unemployment indeed remains high through the fall and into winter, things could start getting especially dire for those those out of work. States generally provide 26 weeks of unemployment benefits in normal times, and some as little as 12 weeks.
The CARES Act extended the maximum duration of those state benefits by 13 weeks through December. Some workers who started collecting benefits in mid-March could run out by early September in less-generous states and by early December in others — leaving them with no financial safety net.
Marfoglia, who has worked in various Los Angeles restaurants for three decades and said he served as a private waiter for actress Jodie Foster on a few occasions, made roughly $5,600 a month after taxes while employed.
He gets less on unemployment, which pays about $4,000 a month between the state and enhanced benefits.
The bulk goes toward monthly bills — about $3,600-$3,700 a month, split between rent, a car payment, auto insurance, credit card debt, health insurance over the state exchange, a cell phone bill, two loans and necessities like groceries and gasoline.
That leaves little for unexpected expenses. Recent car maintenance, for example, will cost him about $500.
The $600 has been "life-saving," Marfoglia said. Without it, his unemployment pay would be more than halved.
"I'm not living high on the hog," Marfoglia said. "I'm paying my bills.
"The income I earned, I needed to earn that to live."
Marfoglia has already negotiated a rent reduction with his landlord, which he'll have to repay, and has consolidated monthly credit card debt, which roughly halved his monthly bill to $320.
Marfoglia, who's single, only got $120 from a federal stimulus check due to his income level. (The CARES Act provided individuals with $1,200 if their income was less than $75,000 before tax.)
Even if he could find a job in another industry over the short term to make ends meet, Marfoglia is skeptical he'd be able to replace his prior job's wages.
"I'm really scared because of the fact the money might not continue ... [and] to think I may lose everything," he said.