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When the coronavirus pandemic hit this spring, government aid payments provided a life raft to millions of people who were laid off.
However, this life raft is now losing air, threatening to leave the unemployed in a dangerous situation, just as Washington leaders are struggling to get a new package of aid ahead of the November election.
A new study by the JPMorgan Chase Institute and the University of Chicago, focusing on 80,000 unemployed, shows savings accumulated when the government provides aid that is currently rapidly running out, leaving people like chemist Kate McAfee worried about their future.
“I’m still unemployed,” said McAfee, who was fired from her job outside Cleveland in April. “I’ve exhausted my 26 weeks of unemployment here in Ohio, and moved on to an additional 13 weeks of extended benefits from the federal government.”
Millions of Americans are in a similar situation as the decline in the pandemic drags on.
The cafe in downtown Denver, where Terra Burton worked, was trying to open in the summer, but with little traffic from vacant offices nearby, it temporarily closed.
“I stick to that word, ‘Burton said,'” he said. “It’s hard to see so much slipping through our fingers in this community.”
In the spring and early summer, Burton and her partner managed financially, thanks in part to an additional $ 600 a week in unemployment benefits, which Congress approved in March.
Burton remembered his surprise when he received his first unemployment check. That was almost twice as much as she did in the cafe.
“I will accept it because I have worked hard all my life,” Burton said. “We managed to save a little more savings and pay off a few low bills. Our exit budget was zero. The budget is zero.”
But for the unemployed, the picture changed dramatically after an additional $ 600 a week expired in late July.
McAfee, a chemist in the Cleveland area, saw that unemployment benefits were more than halved, which put a strain on his wife and two children.
“We are slowly eating away at the savings we have had since the good times earlier this year, and now it is becoming a challenge,” McAfee said.
Researchers at the JPMorgan Chase Institute, in collaboration with the University of Chicago, found that many unemployed people managed to raise extra money between March and July, while the government spent freely to mitigate the decline. Average family savings doubled approximately during this period.
But researchers found that the unemployed began draining their savings in August, burning about two-thirds of the money they had earned in the previous four months.
“The pillow is worn out and we still haven’t regained all the jobs we lost,” said Fiona Greig, director of consumer research at JPMorgan Chase Institute. “This is a critical time for the unemployed.”
Job growth has slowed in each of the last three months. And with the ongoing layoffs, nearly 1.3 million people filed new unemployment claims last week.
The unemployed now spend less than at the beginning of the summer. And their costs are likely to fall further as their newly built savings are exhausted.
Kelly Griffin, an information technology worker in Massachusetts, saw her income fall by about two-thirds after an additional $ 600 a week expired.
“It was difficult,” Griffin said. “You don’t go out to eat. You don’t waste things unnecessarily. I squeaked and saved and started to panic. Will I ever find a job again?”
Fortunately, Griffin did get a job offer and it will start next week. But many others were not so lucky.
“I hate it when people say the extra $ 600 prevents us from working,” McAfee said. “It never bothered me to work. I want to go back to work and I would like to have a job again.”
McAfee is trying to make extra money by sewing face masks. But this is not a substitute for a regular salary.
“It’s not a situation that I wish anyone would be constantly mired in without an predictable end,” she said. “I don’t know when I’ll find a job again. We hope it will be soon. But until then, it’s just constant stress for everyone.”