About 12 million Americans will lose unemployment benefits in December when CARES Act provisions lapse, absent an extension, according to a new analysis.
Unemployment benefits will terminate for more than half of current recipients at the end of the year, coinciding with a lapse in federal protections for renters and a resumption in student loan payments.
That intersection may spell financial catastrophe for jobless workers without action from Congress or the White House, according to economists.
Meanwhile, Americans had already been reporting higher levels of food insecurity and trouble paying bills, and poverty levels have been steadily increasing in recent months.
"It's a tremendous amount of risk for families who are affected," Ernie Tedeschi, an economist at Evercore ISI and a former Treasury Department official, said of expiring aid programs. "[Unemployment benefits] are their last economic line of defense. And it'll be gone on Dec. 31 unless Congress extends it."
Further, the economic recovery under way seems to be losing steam, signaled in part by slowing job growth and retail sales. Rising Covid-19 infections, hospitalizations and deaths have led state officials to reimpose some shutdown measures, putting more people out of work.
Federal lawmakers passed the $2.2 trillion CARES Act in March, the largest-ever financial relief package in the U.S., in the early days of the coronavirus pandemic.
The law beefed up jobless benefits in several ways. But those provisions were temporary.
Roughly 12 million workers will lose their benefits at the end of December, when key programs are scheduled to expire, according to an analysis published Wednesday by the Century Foundation. Another 4 million-plus will have already run out of their allotted benefits by then.
The lapsing programs include: Pandemic Unemployment Assistance for the self-employed, gig workers and others ineligible for traditional state unemployment insurance; and one paying about three extra months of benefits to workers who run out of state aid, which typically last up to six months.
Some states with elevated unemployment rates will continue paying aid via extended benefit programs into 2021.
Even so, about 13.5 million workers collecting benefits will be without any relief after year-end, according to the Century Foundation analysis. That's more than half the roughly 20 million current recipients of jobless aid.
Meanwhile, unemployed workers' savings was starting to dwindle in recent weeks, after a $600 weekly boost to unemployment pay lapsed, according to separate analyses conducted by Tedeschi and JPMorgan Chase.
"There's increasing evidence they're threadbare," said Emily Benfer, a law professor at Wake Forest University.
Lapsing benefits are poised to hurt people of color and low-income Americans, who suffered a disproportionate amount of layoffs due to the pandemic, the most.
Over 83% of the Black labor force in California has filed for unemployment benefits since the beginning of the pandemic in mid-March, according to an analysis published Thursday by the California Policy Lab. That's nearly double the state-wide average.
In October, food, housing and utility assistance requested by Americans was up sharply from the year prior, according to Washington University in St. Louis, which tracks helpline calls around the country.
That rise was up most markedly among renters, according to the university, which noted a threefold increase in their housing-related requests since the pandemic started.
But a federal eviction moratorium currently in place expires at the end of the year.
There will be between 5.5 million and 6.5 million pending evictions filed by Jan. 1 if the Trump administration doesn't extend those protections, according to data compiled by Stout, an investment bank.
Since this only reflects the number of legal filings, the number of people at risk is likely much higher.
"It's the perfect storm. Here, you are losing the only available resource you had to keep your family housed, at the same time any protections against evictions are disappearing," Benfer, chair of the American Bar Association's Covid-19 eviction task force, said of the lapse of unemployment benefits.
Landlords have still found ways to flout the moratorium, which was imposed in September by the Centers for Disease Control and Prevention after earlier protections ended, according to Benfer. However, it had a chilling effect on eviction proceedings, she said.
Many renters won't likely be able to fall back on state-level or local eviction protections after December, since only a handful still have that relief in place and will continue it into next year, she said.
Around 37 million out of the 42 million Americans with federal student loans have paused their payments in recent months, according to one recent analysis.
In August, the U.S. Department of Education allowed such borrowers to stop making monthly payments through the end of the year, without interest accrual. That policy was a continuance of an earlier one from March.
Borrowers will have to resume those payments come January.
It's unclear whether President Donald Trump will extend the rental or student loan protections in place. Congress has also been deadlocked for months in its negotiations on another stimulus package, and it looks increasingly unlikely the stalemate will end by January.
Trump hinted at the possibility of an extension in August, when he signed an executive measure around student loans.
"Today I'm extending this policy through the end of the year, and we'll extend it further than that, most likely right after Dec. 1," he said.
However, Trump's disposition may have changed after losing the election to President-elect Joe Biden.
Of course, the incoming Biden administration could reimpose protections after his inauguration on Jan. 20. Much damage could be done by that point, however, especially for renters, Benfer said.
An eviction filing lodged in January (or earlier) could negatively impact a renter's credit and ability to secure an apartment in the future, for example, Benfer said. It may also scare renters into leaving their residence prematurely, she said.