Over 11 Million Americans Will Lose Some Unemployment Benefits Sept. 6 as Extra Funds End

More than 11 million Americans are estimated to lose some unemployment benefits as extra funds distributed since the onset of the COVID-19 pandemic are scheduled to expire, the Associated Press reported. The extra benefits provided an additional $300 a week to beneficiaries already receiving general aid on a state level.

Greg Daco, chief U.S. economist at Oxford Economics, estimated that 11 million people would lose at least some of their benefits across 35 U.S. states, the District of Columbia and Puerto Rico, the AP reported. Of those 11 million, about 8.9 million are expected to lose all benefits, while 2.1 are estimated to lose only the extra $300 federal aid.

In an effort to motivate people receiving unemployment benefits to return to work, 25 states have already frozen the extra federal benefits for about 3.5 million people, Daco said. Economists Peter McCrory and Daniel Silver of J.P. Morgan said in a report released last week that "zero correlation" was found between employment growth and the halting of the extra benefits.

The unemployment cuts "could itself lead to job losses, potentially offsetting any gain" from pushing people to return to work, McCrory and Silver said.

For more reporting from the Associated Press, see below.

Extra Unemployment Benefits End
A judge on Tuesday, August 31, sided with Missouri Gov. Mike Parson in his decision in June to end several federal programs that provided enhanced jobless benefits for Missourians. Parson delivers the State of the State address in Jefferson City, Missouri on January 27, 2021. Jeff Robertson/AP Photo

"We were a thriving middle-class family 18 months ago,'' said Chenon Hussey of West Bend, Wisconsin. "We're going to fall off the map'' when the federal benefits end, she continued.

Hussey, 42, who works part-time for a county government, is trying to revive a small motivational speaking business that was crushed by the pandemic. Her husband, a master welder, has been laid off three times during the health crisis.

The federal benefits, she said, have been "the bridge from absolute poverty for us.'' Without them, Hussey said, their monthly income will drop by $2,800. They won't be able to afford the intensive care that their daughter, who has developmental disabilities, needs. They may have to move her to a group home, "which is what we never wanted for her.''

Their cars are paid off, but the mortgage remains a struggle.

"It's going to take us a while to get through it,'' she said. "We are positive in the fact that we're both willing to do what we need to do.''

More than 2.7 million people were receiving traditional jobless benefits in the week of August 21, down from 2.9 million the previous week and the lowest level since the pandemic struck.

Including federal benefits, nearly 12.2 million were receiving some type of unemployment benefits in the week of August 14, down dramatically from 29.7 million a year earlier.

That drop is a result, in part, of the increased number of people working and no longer receiving jobless aid. But it also reflects the cancellation in many states of a federal unemployment aid program for the self-employed and a separate program for the long-term jobless.

"The expectation remains that labor supply shortages will ease over coming months as benefits end and schools reopen," Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a research note. "Even so, health risks, which could influence decisions regarding return-to-work arrangements and school re-openings, could be a constraint for the labor market going forward.''

The number of Americans seeking unemployment benefits fell last week to 340,000, a pandemic low and another sign that the job market is steadily rebounding from the economic collapse caused by the coronavirus pandemic.

Jobless claims dropped by 14,000, the Labor Department reported Thursday. The weekly count has mostly fallen steadily since topping 900,000 in early January.

Vaccinations for COVID-19 have been supporting the job market by encouraging businesses to reopen or expand hours and consumers to return to restaurants, bars and shops. In response, employers across the country have been boosting hiring to meet a surge in consumer demand. Still, a resurgence of cases tied to the highly contagious Delta variant has clouded the economic outlook.

Filings for jobless aid have long been regarded as a real-time measure of the labor market's health. But their reliability has diminished during the pandemic. In many states, the weekly figures have been inflated by fraud and by multiple filings from unemployed Americans trying to navigate bureaucratic hurdles to obtain benefits. Those complications help explain why the pace of applications remains unusually high despite strong hiring.

The job market has been rebounding since the pandemic paralyzed economic activity last year and employers slashed 22 million jobs in March and April 2020. The nation has since recovered 16.7 million jobs, and economists have estimated that Friday's jobs report for August will show that employers added 750,000 more last month. Posted job openings — a record 10.1 million in June — have been rising faster than applicants have lined up to fill them.

Extra Unemployment Benefits Expire
Throughout the U.S., 25 states have ended extra federal unemployment benefits in an effort they claim will motivate people to go back to work. A hiring sign is displayed in a store window in Manhattan on August 19, 2021 in New York City. Spencer Platt/Getty Images