There’s an Unemployment Benefits Cliff Coming: What You Need to Know

This Labor Day weekend isn’t only going to mark the unofficial end of summer this year – it’s also going to mark the end of enhanced unemployment benefits for millions of out-of-work Americans. Yes, barring Congress extending the benefits beyond the September 6 expiration of the program that has been in effect since March 2020 (which seems unlikely), it’s estimated that about 7.5 million Americans will lose out on benefits. (It’s worth noting that those eligible for state unemployment benefits may still qualify for an extra $300 per week.)

Economists are calling the looming expiration a “benefits cliff,” and out-of-work Americans stand to lose a lot when this expires. Any self-employed, gig worker or freelancer will also lose out on these extended benefits, as such professionals normally would not qualify for unemployment aid. According to data from the U.S. Labor Department, about 9 million Americans were claiming benefits around the Fourth of July holiday. The Labor Department estimates that about 7.5 million will still be claiming benefits when the program expires on September 6.

Where Does Unemployment Stand?

We’ve written about the precarious situation with jobs in America at times in this space over the last several months, specifically about how many employers are struggling to fill openings while out-of-work Americans are claiming these benefits. Specifically, the economy added more than 580,000 jobs in May and 850,000 in June. But even with these gains, unemployment is still sitting around the 6 percent mark – and the U.S. economy on a whole is down about 7 million jobs from pre-pandemic levels.

Like we noted, many believe that the enhanced unemployment benefits haven’t led to a great sense of urgency for out-of-work Americans to seek work. It’s led about half of U.S. states to prematurely end the enhanced benefits from the federal government, and it’s led a handful more to require the unemployed to prove they are actively searching for work in order to continue to receive such benefits. The hope is that when the benefits expire, many Americans will once again look to re-enter the workforce, which will continue to advance the U.S. economy and help it recover from its pandemic recession.

Will Benefits Be Extended?

As we noted, it’s unlikely that Congress will strike a deal to extend unemployment benefits. The only way this is likely to happen is if layoffs escalate and unemployment claims rise in the wake of rising COVID-19 cases, which are largely impacting communities with low vaccination rates. So it’s unlikely, but certainly not impossible, that an eleventh-hour agreement could be reached. After all, we’ve seen it happen before. What’s more is the government did just extend the eviction ban in areas that are seeing rising COVID rates following its recent expiration.