What happens if the expanded unemployment benefit goes away : The Indicator from Planet Money Nearly one in five U.S. workers is on unemployment benefits. And most of them are about to see their checks cut in half, as Congress' expanded benefits expire this month.
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The Extra $600

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The Extra $600

The Extra $600

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UNIDENTIFIED PERSON: NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

STACEY VANEK SMITH, HOST:

Cate Cundiff lives in Los Angeles with her husband and their 2-year-old daughter. She works as a stage manager in theater.

CATE CUNDIFF: I have been working in theater my whole life since I was a little kid. I've been very fortunate to work in some of the best theaters in the country.

VANEK SMITH: Back in March, a production that Cate was working on closed down because of COVID-19. At first, Cate thought everything would get back to normal in a few weeks. But it soon became clear that was not going to happen.

CUNDIFF: Within a matter of a week, every job I had lined up for myself until the fall was gone.

VANEK SMITH: Cate realized not only was she out of work but also that there was not going to be any work in her field for a long time.

CUNDIFF: Theater and events are just decimated. They're just completely gone. You know, some events are virtual. And some theaters are doing Zoom readings, but, like, you know, it's gone.

VANEK SMITH: Cate is 34, and she's invested more than a decade building up her career in theater. She says she'd gotten to the point where she had really steady work and was bringing in at least $60,000 a year. But when all of Cate's jobs went away, her financial situation changed drastically. Her husband still had a job luckily, but the family counted on her income.

CUNDIFF: It was rough. (Laughter) It was a little rough and a little scary.

VANEK SMITH: Cate says the thing that saved her was the extra $600 a week that she was getting because of the CARES Act that Congress passed back in March; at least, it was saving her. Those additional benefits expire this week. And right now Congress is in a heated debate about whether to extend those benefits until the end of the year, reduce them a bit or just not renew them at all.

This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith Today. On the show - unemployment. It's estimated that nearly 20% of the country - 1 in every 5 people - is on unemployment benefits right now, and most of them are set to see their unemployment checks cut in half. We look at what that means for unemployed workers like Cate and what that would mean for the U.S. economy.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

VANEK SMITH: The reason the CARES Act added $600 onto everyone's unemployment check was that $600 is roughly the amount that you could add to a state's unemployment check to get the average worker back to what they were earning before the economic shutdown. Heidi Schierholz is a senior economist at the Economic Policy Institute. She says Congress needs to extend those benefits ASAP.

HEIDI SCHIERHOLZ: It is absolutely crucial. That - it is obviously good for the people who would then be able to sustain their incomes, not see a big drop in their living standards. But then the indirect effect is at least as important because that spending those unemployed people are doing is supporting a huge number of other jobs. And it's not an academic point. It is real.

VANEK SMITH: Heidi says most people earn less than half of their previous salary on just regular state unemployment insurance. And if 20% of Americans saw their incomes drop in half all at the same time, it would mean they would cut back their spending at the same time on clothing and food and appliances and doctor's visits. And all of those businesses - the doctors' offices, the clothing stores, the grocery stores - would see a drop in income, and they would also have to lay people off.

SCHIERHOLZ: That spending, that $600 in extra weekly benefits that right now unemployed people get and are, therefore, spending in the economy is supporting another more than 5 million jobs. So you kill that $600, you kill those five million jobs. It's that straightforward.

VANEK SMITH: Heidi says she also worries that we will see a wave of defaults on credit card bills, car payments, utilities. And all of that would ripple through the whole economy, not to mention through people's lives.

SCHIERHOLZ: So without that money, people will have to be making these terrible decisions between rent, medicine, food on the table. And what we will see is then a round of, well, people can't meet their rent payments. So evictions, foreclosures - and you get these knock-on effects that are completely avoidable. It would be a huge unforced error that would drag the economy down even further. So money we invest in this right now is just - it has huge payoffs for sustaining the economy.

VANEK SMITH: Cate Cundiff in Los Angeles says her weekly income is about to go from more than $1,000 a week with the extra unemployment benefits to about $400 a week.

CUNDIFF: I don't know how I would be able to afford anything. I mean, one week of regular unemployment without the $600 doesn't even cover a month of health insurance for my daughter and I, let alone rent, child care so I can try to find a job, you know, food, bills. Like, we still have bills to pay. You know, my husband still has student loans. I still have a car note. Rent is still due, you know? It's - and it's not - it's going to be really tight and really scary.

VANEK SMITH: Cate has been able to find a little bit of work as a receptionist for a doctor's office about 12 hours a week. She says, though, this experience has convinced her to change careers; go into a profession that's more stable where she won't have to worry or scrimp like this ever again.

CUNDIFF: It feels like grief. You know, I've spent my entire life doing something that's not an easy industry and not an easy industry to make a living in. And I've been lucky, and I've been successful in it. And it's something I care deeply about. Like, no one goes into theater for money. And so it's something - it's hard, and it's sad to give it up. But having something with a little bit more stability right now feels like a necessary adjustment. But, yeah, it does feel like grieving and mourning for something that I have to let go of.

VANEK SMITH: Mostly, Cate says, she is worried about what she'll do if some emergency happens. Last year, her daughter had ear surgery. And Cate says if something like that happened now, she wouldn't be able to afford it. And she does not know what she would do.

CUNDIFF: I just had this, like, little thing that occasionally pops up in my brain. And it's like, she's a toddler. What if she splits her head open? What if she eats something like toddlers do? Or, you know - so it's scary to not have that financial cushion for anything that could happen that she would need. And I'm trying not to think too, too hard about it because it just sort of turns me into an anxiety tailspin if I do. But it's a big change. I mean, we've already cut back drastically on everything. And we're pretty much just paying for the essentials and bills. But I don't even know how we're going to be able to afford that, especially things like our rent, once the $600 is over.

VANEK SMITH: The Trump administration has proposed an emergency bill that would extend to the $600 in expanded unemployment at least temporarily until Democrats and Republicans in Congress can agree on another economic aid and stimulus package.

This episode of THE INDICATOR was produced by Camille Petersen, fact-checked by Brittany Cronin. THE INDICATOR is edited by Paddy Hirsch and is a production of NPR.

(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")

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