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When the coronavirus pandemic hit in the spring, public relief payments provided a lifeline to millions of people who had been thrown out of work.
However, this life raft is now losing air and threatening to leave the unemployed in a dangerous situation, just as Washington leaders are struggling to get a new package of help ahead of the November election.
New research from the JPMorgan Chase Institute and the University of Chicago focusing on 80,000 unemployed shows savings built up as government assistance now quickly runs out, leaving people as chemist Kate McAfee worried about their future.
“I’m still unemployed,” said McAfee, who was fired from his job outside Cleveland back in April. “I have now exhausted my 26 weeks of unemployment here in Ohio and have moved on to the additional 13 weeks of extended benefits from the federal government.”
Millions of Americans are in a similar situation as the slowdown in the pandemic draws to a close.
The center in Denver, where Terrah Burton worked, tried to reopen in the summer, but with little foot traffic from vacant offices nearby, it temporarily closed its doors again.
“I’m stuck with that word ‘temporarily,'” Burton said. “Seeing so much slip through our fingers in this society is hard.”
During the spring and early summer, Burton and her partner made ends meet financially, thanks in part to the extra $ 600 a week in unemployment benefits that Congress approved back in March.
Burton recalled her surprise when she received her first unemployment check. It was almost twice as much as she had made at the coffee shop.
“I accept it because I’ve worked hard all my life,” Burton said. “We were able to put a little bit extra into savings and pay a few low bills. Our budget that was out there was zero. Our to-the-bar budget was zero.”
But for the unemployed, the picture changed abruptly when the extra $ 600 a week ran out in late July.
McAfee, the chemist in the Cleveland area, saw that her jobless benefits were cut by more than half, straining her husband and their two children.
“We are slowly eating our savings away from the good times earlier this year and it is becoming challenging now,” McAfee said.
Researchers at the JPMorgan Chase Institute, in collaboration with the University of Chicago, found that many of the unemployed managed to stock up on extra money between March and July while the government spent freely curbing the downturn. Median family savings roughly doubled during this period.
But researchers found that the unemployed began draining their savings in August and burned through approx. two-thirds of the money they had squandered away over the previous four months.
“The pillow is worn thin and we have not yet regained all the jobs we lost,” said Fiona Greig, director of consumer research at the JPMorgan Chase Institute. “This is a critical time for unemployed workers.”
Job growth has slowed in each of the last three months. And with continued layoffs, nearly 1.3 million people filed new unemployment claims last week.
Unemployed workers spend less now than they did early in the summer. And their spending is likely to fall further as their newfound savings are exhausted.
Kelly Griffin, an IT employee in Massachusetts, saw her income drop by about two-thirds when the extra benefit of $ 600 a week ran out.
“It was hard,” Griffin said. “You do not go out to eat. You do not use things unnecessarily. I scratched and saved and began to panic. ‘Should I ever get a job again?'”
Luckily, Griffin got a job offer and she’s ready to start next week. But many others have not been so lucky.
“I hate it when people say the extra $ 600 prevented us from working,” McAfee said. “It never stopped me from working. I want to be back at work and I would very much like to have a job again.”
McAfee has been trying to make extra money sewing face masks. But it is no substitute for a regular paycheck.
“It’s not a situation I want someone to constantly get stuck in this with no predictable end to it,” she said. “I do not know when I will get a job again. Hopefully it will be soon. But until then, it’s just constant stress for everyone.”