Jun 29, 2021 - Economy

Unemployment lifeline disappears

A hand pulling away a dollar bill with a miniature man clinging to the bottom

Illustration: Sarah Grillo/Axios

It's not just the extra $300. A subset of workers around the country is getting shut out of the unemployment system altogether.

Driving the news: Of the 26 states cutting topped-up benefits, all but four are ending (or have already ended) the program that allowed self-employed, gig and freelance workers to collect jobless aid.

Why it matters: It's part of a grand experiment underway in states across the country: preemptively shutting off pandemic-era programs in an effort to coax people back to work as businesses say they can't find staff.

  • "They were promised benefits until September. Months later, states are saying 'nope, just kidding.' That's what's truly unprecedented," says The Century Foundation's Andrew Stettner.

Flashback: Typically, contractors or others with limited work history are ineligible for unemployment. Pandemic Unemployment Assistance (PUA), created in the first stimulus package, changed that.

  • Nearly 6 million are collecting unemployment through this program, according to government data — though that's likely overstated.

What they're saying: "We have full industries that are coming back slowly, like entertainment," which employs people currently relying on the program, says Stephanie Freed, who helped create ExtendPUA.org, an advocacy group.

  • Uber and Lyft — whose workers leaned on PUA — say they are facing a driver shortage as demand soars back.

What's happening: The early cutoff of the program so far impacts at least 2 million Americans, according to estimates by Stettner.

  • That includes workers in a program that offers benefits for those who have exhausted traditional state benefits (also ending in 22 states).

The big picture: "Some people are losing some money and others are losing all money," in states cutting unemployment benefits, says Kathryn Edwards, an economist at RAND.

  • "It's not a consistent strategy, which made me think there's no clear target — it's just 'let's cut unemployment benefits, somehow.'"
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