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What The End Of Unemployment Aid Means For The Job Market And Economy

AUDIE CORNISH, HOST:

And for more action to help the unemployed, now NPR's Scott Horsley joins us to talk about how this sudden loss of unemployment benefits might affect the broader economy.

Welcome back, Scott.

SCOTT HORSLEY, BYLINE: Hi, Audie.

CORNISH: Millions of people are losing this aid just as there's this sharp actual, like, slowdown in hiring. Is this what policymakers expected?

HORSLEY: I don't think so. When today's deadline was originally crafted back in the spring, the hope was that the job market would be on more solid footing by the time the aid was taken away. And we did see really solid job gains early in the summer, when it looked like the pandemic was in retreat. But then along came the delta variant, and it really slammed the brakes on the economic recovery. U.S. employers added just 235,000 jobs last month, less than a quarter of the number they added in both June and July. White House economist Cecilia Rouse acknowledges the government is cutting off unemployment benefits just as we're facing some stiff new headwinds from the pandemic.

CECILIA ROUSE: As we've said from the beginning, this is an economic crisis that is being driven by a pandemic. And so in order for us to get to the other side and for us to fully recover, we're going to have to fully recover from the pandemic.

HORSLEY: And that's proving easier said than done with this unpredictable virus. Now, President Biden did say that he will be announcing new initiatives later in the week to boost vaccination rates. But of course, that's not going to happen overnight. And meanwhile, the last of the emergency benefit payments are going out right now.

CORNISH: What do we know about what could happen as these benefits expire? I mean, half of states had already cut extended unemployment benefits, I think, earlier in the summer.

HORSLEY: That's right. About two dozen states cut benefits in June or early July, and the mostly Republican governors of those states were hoping that would push more people back to work. A lot of business owners had complained that these benefits were discouraging people from looking for jobs. What researchers have found, though, is that people in the states that cut benefits early were only a little bit more likely to find jobs than the people in states where the benefits kept going until today. What's more - you heard Lauren and Anita talk about how these benefits allow them to keep paying their bills - most of those who lost benefits did not find jobs right away, so they had no benefits and no paycheck. Not surprisingly, they had to dial back their spending, and now we're likely to see that repeated in the remaining states.

These benefits were putting about $30 billion a month into the pockets of the unemployed. When that goes away, it's obviously a hardship for the people losing the benefits. But it could also mean less money for, you know, the neighborhood grocery store, the gas station, the landlord - all the people who were benefiting from keeping the unemployed afloat.

CORNISH: Are lawmakers thinking about doing what they've done a couple of times already, which is extend these benefits?

HORSLEY: There's been no big national push by lawmakers. The administration has subtly shifted its tone on this subject as the deadline got closer. Back in June, President Biden said it made sense for the benefits to end this week. By mid-August, though, with the delta variant raging, both the treasury secretary and the labor secretary said it might make sense for some states to extend the benefits. Now, Rouse notes there is a lot of variation. You got states like Utah and South Dakota, where unemployment is below 3%. And then you have states like Nevada, heavily dependent on tourism, where unemployment's pushing 8%.

ROUSE: It's no longer one-size-fits-all. And so it's important that the governors have the tools that they need so that they can help the workforce in their states and to be responsive to their local economic environment.

HORSLEY: On Friday, the president stressed states have the option to extend benefits using some of the discretionary money in the American Rescue Plan. But so far, no state has announced plans to do so.

CORNISH: That's NPR's Scott Horsley.

Scott, thank you for the update.

HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.