Millions of Americans set to lose jobless aid even as Delta variant slows hiring

Millions of Americans who have depended on federal unemployment aid as a financial lifeline during the COVID-19 pandemic are set to lose those critical benefits even as the job market has slowed amid a resurgence of infections driven by the Delta variant of the coronavirus.

Neither Congress nor the Biden administration has provided any indication they will take action as two federal programs — one that provides unemployment aid to self-employed and gig workers, and the other to people who have been without a job for more than six months — are about to expire on Monday.

As a result, 8.9 million recipients will lose those weekly benefit payments, according to an estimate by Oxford Economics. An additional 2.1 million people will lose a $300-a-week federal supplemental unemployment payment, which also expires Monday.

These recipients will, however, continue to receive state unemployment benefits.

This comes as a spike in coronavirus cases is weighing on the economy, dragging down hiring in hard-hit sectors like hospitality and entertainment, and dampening consumer confidence.

As an indication that the virus surge is having an adverse impact on the economy, data released on Friday by the Labor Department showed that the US created the fewest jobs in seven months in August.  

US job growth takes a giant step back as Delta variant hits restaurants

The US economy created the fewest jobs in seven months in August as hiring in the leisure and hospitality sector stalled amid a resurgence in COVID-19 infections.

Analysts say that since it is the head of a household that receives the weekly unemployment aid, a cut in those benefits will impact a total of roughly about 35 million individuals.

"According to the Census Household Pulse Survey, the average household that is receiving UI (unemployment insurance) benefits has 3.8 members in it," Matt Bruenig of the People's Policy Project observed. "This means that around 35 million people live in households that are scheduled to lose unemployment income."

"These are not small cuts either," he continued. "Based on what happened in the states that already cut these benefits, we know that around half of those on UI will see their benefits drop to $0 while the remaining half will see their benefits cut by $300 per week, which is equivalent to $15,200 per year.”

The current expanded jobless aid programs were tucked in the financial rescue legislation that Congress passed after the pandemic erupted. President Joe Biden extended the programs in March.

Lawmakers had hoped that a successful vaccination rollout and a rebounding economy would mean that a larger share of the population would rejoin the job market and eventually wean off the federal assistance programs.

However, while the economy is still rebounding, economists worry that the Delta variant is slowing both hiring and growth.

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