Thousands face end of unemployment benefits on December 26

Update: An edit was made to reflect that the SBA estimates one-third of all small businesses will fail by June of 2021.

With growing signs that the economic recovering is stalling out and a fresh set of COVID-based lockdowns across the United States, federal benefits will end on December 26 with no extension in sight. The Federal CARES Act provided additional unemployment benefits in Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC). For thousands of Washingtonians depending on these lifelines, the looming deadline is a body blow.

PUA provides for an additional 13 weeks of unemployment compensation above and beyond state benefits. PEUC provides unemployment compensation for gig workers, the self-employed, and others who rely upon 1099 pay. Recipients of PEUC typically would not be eligible for traditional unemployment compensation, with millions of Americans dependent on the “gig economy” for work.

Congressional leaders, the White House, and the Federal Reserve have been bickering over a new COVID stimulus package since the summer with no progress. The White House has favored a $2.4 trillion package, including small business and individual relief, which the House has supported. The Senate prefers a far smaller package of $500 billion, which provides almost no individual relief and corporate protections that are a non-starter for the House.

Federal Reserve Chairman Jerome H. Powell issued a very rare rebuke to Treasury Secretary Mnuchin, who ordered the Fed to wind down CARES Act programs and return all unspent funds to Treasury. Chairman Powell indicated that the economy is still fragile, and ending these programs prematurely as COVID surges could extend the ongoing recession. Despite the public dust-up, the Fed agreed to wind down these programs over the weekend in a letter to Mnuchin.

The unemployment rate has dropped to 6.9% in October. However, the U3 unemployment figure doesn’t include people who have exhausted their unemployment benefits. The broader U6 unemployment figure consists of those who have used up unemployment compensation, given up looking for work, or, most critically, are underemployed. The U6 for October was 12.1%, down from a high of 18% earlier in the year.

White House and GOP leaders are distracted, attacking the national election results with baseless fraud claims, indicating they have no interest in focusing on economic security. The Small Business Association estimates one-third of all small businesses will fail by June of 2021. So far, in 2020, 40% of all black-owned small businesses have collapsed.

Also looming in early 2021 is the end of eviction, foreclosure, and energy bill deferments. Over 12 million American households are $5,000 or more behind on rent or mortgage payments.

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