As Congress breaks for Thanksgiving, 12 million Americans may lose jobless benefits on December 26
Are you and your family changing your holiday spending this year because of the coronavirus pandemic? CNBC Make It would like to talk to you. Email money reporter Alicia Adamczyk at email@example.com.
Unless Congress can agree on a new stimulus deal in the next few weeks, an estimated 12 million workers will lose their unemployment benefits on December 26, according to a new report from The Century Foundation, a progressive think tank, leaving them with "little or no means of support" in the new year.
Without a deal, federal funding will lapse for two key unemployment programs on Dec. 26 because of deadlines written into the CARES Act in March: The Pandemic Unemployment Assistance (PUA) program, which extended unemployment benefits to gig workers and freelancers who don't normally qualify, and the Pandemic Emergency Unemployment Compensation (PEUC) program, which provides an extra 13 weeks of UI to those who have exhausted their state's benefits.
An estimated 12 million workers — more than half of the 21 million people currently collecting UI — will be receiving jobless benefits from those two programs at that time, according to TCF's report, and are at risk of falling off a benefits cliff.
Another 4.4 million workers will have already exhausted their benefits, meaning more than 16 million people "will be heading into 2021 with little or no aid available to them," the report says.
Congress is no closer to reaching a stimulus deal
For months, economists have been ringing the alarm that the benefits "cliff," as TCF calls the coming dropoff, could leave millions of households unable to pay for basic needs like food and rent.
"Without unemployment benefits and with savings badly depleted, families will be at high risk for food insecurity and loss of their homes, and many may be unable to pay for health care during some of the darkest days of the pandemic," TCF's report says.
Yet despite widespread, bipartisan acknowledgement that something needs to be done, Democrats and Republicans have been unable to agree on what to include in another stimulus bill.
The Democrat-led House passed the $3 trillion HEROES Act in May and another $2.2 trillion stimulus bill in October, both of which extended unemployment insurance into 2021, including reinstating the extra $600 per week in benefits that the CARES Act provided in the first few months of shutdowns.
The Republican-led Senate has so far refused to agree to such an expensive bill. The upper chamber first proposed the $1 trillion HEALS Act in July and an estimated $500 billion "skinny" bill in September. The HEALS Act would have extended some enhanced benefits through September 2020, but the skinny bill did not extend the CARES Act's unemployment insurance provisions into 2021.
Lawmakers will head home for Thanksgiving soon, making it even less likely they will reach a deal before they break for the year in December. As they do, millions of Americans could potentially lose their own residences when the nationwide eviction moratorium also expires at the end of the year. Tens of millions more cannot afford enough food to eat.
Long-term unemployment is on the rise
While unemployment numbers appeared to be improving the past few months, many states have had to rollback plans for reopenings as Covid-19 outbreaks surge across the country.
Large companies, including Disney, have recently laid off workers, and the authors of TCF's report write that this trend will continue as the U.S. records close to 150,000 new virus cases each day.
Even before the recent case surges, long-term unemployment was on the rise. The share of jobless workers out of work for 27 weeks or more shot up from 19.1% to 32.5% in October, according to data from the Bureau of Labor Statistics.
"There are simply not enough jobs being created to support all of the workers running out of aid before the end of 2020," reads TCF's report. Without the continuation of the federal unemployment programs, "the nation's entire economy will suffer."
TCF expects things will only get worse through the winter as Covid-19 continues to spread unabated. And without some kind of stimulus deal, millions will suffer financially.
"Jobless workers cannot wait until January," reads the report. "The stakes are simply too high.
Correction: The Senate has adjourned until after Thanksgiving. The House is still in session.
- Biden calls for Congress to pass another coronavirus relief package. But there's no sign of a stimulus deal as holidays approach
- Here's what President-elect Joe Biden wants to include in a coronavirus stimulus bill
- Americans' message to the next president: Pass more stimulus
- Advocates worry about an eviction crisis as 2021 approaches without a stimulus deal
- The CARES Act kept many families financially afloat. Now millions are falling into poverty without additional aid
Don't miss: Best credit cards for Black Friday and Cyber Monday shopping of 2020