Millions of Americans have now been cut off from federal pandemic-era jobless benefits, ending what experts described as the most generous expansion to unemployment insurance (UI) in U.S. history.
Jobless Americans had been receiving extra money in their weekly unemployment insurance (UI) checks since March 2020, following the signing of the massive CARES Act into law by then-President Donald Trump as the coronavirus pandemic first cratered the U.S. labor market. Typically ineligible gig workers and freelancers were also able to take advantage of jobless benefits thanks to pandemic-era, federal-funded joblessness programs.
But those programs have now expired, with President Joe Biden’s $1.9 trillion American Rescue Plan writing in a Sept. 6 sunset date for both outbreak-induced programs. That comes as 26 states already moved on their own to curb enhanced unemployment benefits ahead of that deadline.
The U.S. economy has rapidly improved since last year’s pandemic-related fall out, with experts expecting the fastest rate of growth in four decades. Even as job openings surge to new records and firms echo concerns of labor shortages, the job market still has 5.7 million fewer jobs than before the outbreak. Virus and childcare concerns are keeping workers on the sidelines and the areas where jobs were lost aren’t exactly where they’re returning.
Here’s nine steps you can take with your finances if you’re still unemployed.
1. Know which UI programs expired and how it affects you
If you’ve been collecting unemployment benefits through one of the pandemic-era unemployment programs and have been utilizing the extra money in your weekly check, you’re likely affected by the Sept. 6 expiration — unless you live in a state that already lapsed its benefits.
Congress created two new temporary unemployment programs as the labor market underwent a massive upheaval during the coronavirus pandemic: the Pandemic Unemployment Assistance (PUA) program and the Pandemic Emergency Unemployment Compensation (PEUC) program. PUA extended the UI safety net to gig workers and the self-employed — those typically ineligible for benefits.
A third CARES Act-backed program — the Federal Pandemic Unemployment Compensation (FPUC) — boosted Americans’ weekly checks by an extra $300 on top of what their state normally pays (previous iterations ramped up that benefit to as high as $600 during the height of the pandemic).
All those programs, including the extra money, ran out on Sept. 6.
If you’re a freelancer or gig economy worker, you’ll especially want to pay close attention, as you’re likely no longer eligible for any unemployment program now that PUA has expired.
Otherwise, if you’re a worker who’s still jobless and would normally qualify for UI, you might be able to qualify for your state’s Extended Benefits (EB) program, which most of the time lasts about 13 weeks. Yet, estimates from the Center for Budget and Policy Priorities suggest that just nine states are currently providing their own EB. Meanwhile, previous UI guidelines from the Department of Labor suggest that workers still collecting unemployment benefits cannot turn down a suitable job.
For those eligible to collect UI, your weekly benefit should return to what your state was providing before the CARES Act. At the end of 2019, weekly payouts averaged out to about $371 nationwide, according to Labor Department data.
As of Aug. 14, about 5.4 million Americans were drawing PUA, while 3.8 million were utilizing PEUC, according to the latest estimates from the Department of Labor.
2. Budget wisely, and trim your discretionary purchases
Before your benefits expire, it’s wise to turn to your household balance sheet. Make a list of all of your monthly expenses, including those that are discretionary and nondiscretionary.
Try to find ways where you can cut back for the time being, which could include anything such as dining out, shopping, subscription services — you name it, says Eric Simonson, CFP, owner of Minneapolis-based Abundo Wealth.
“Some people who are receiving unemployment benefits haven’t had to feel the full economic pain yet, just because unemployment benefits have more or less been their whole income,” Simonson says.
3. Reduce credit card bills with a balance transfer
Lowering your debt payments is another way you can reduce your overhead.
One of these ways is utilizing a balance-transfer card. If you’ve been saddled with credit card debt during your spell of unemployment, this option can provide you with some relief. Balance-transfer cards help you consolidate your credit card debt into one monthly payment, many of which offer a low introductory Annual Purchase Rate (APR).
Even then, there’s some fine print to be aware of. Transferring your balance typically also comes with a fee, sometimes anywhere between 3-5 percent. Compare how much you’d save in interest with those upfront costs to determine whether it’s the right situation for you.
4. Try to sock away as much money as you can
When you trim those expenses, put those extra funds in a savings account that’s easy to access. Shop around for the best accounts on the market for your financial situation. Even though interest rates are sitting near historical lows, many non-traditional, online savings accounts offer rates higher than brick-and-mortar banks.
If you’re keeping this money separate from where you normally transact, it will be less tempting to spend. Meanwhile, with a savings account, your money will keep growing.
“If we’re in that situation where we’re going to lose our benefits, and we don’t think we’re going to be employed at that point, it pays to not wait,” Simonson says. “Now is the time to figure out — $50 a month, $200 — that you could cut out of your budget to help pad your cash reserves.”
5. Call lenders, servicers where you regularly have a bill
But discretionary items aren’t the only bills you can possibly trim. Many lenders, servicers and utility companies have been offering “goodwill” programs that help those financially harmed by the pandemic.
When you make a list of all of your monthly bills, be sure to include firms you pay money to regularly — anyone from lenders and mortgage servicers, to banks and credit card issuers. It’s worth reaching out to see if you can take advantage of a payment forbearance plan or reduce your monthly bill entirely. They might be able to craft an individual plan specific to your situation. Even if you’re not sure that a lender offers such a program, don’t be afraid to ask.
If you have a federally-backed mortgage and your income has been disrupted, you can request a payment forbearance plan spanning up to 180 days thanks to pandemic-related relief programs. In most of these cases, though, you must inform the company before you stop your payments. Homeowners have up until Sept. 30 to apply for the program.
Borrowers with loans backed by Fannie Mae and Freddie Mac — as well as the Federal Housing Administration, the U.S. Department of Veterans Affairs and the U.S. Department of Agriculture — can negotiate 20 percent cuts to their payments, the Biden administration announced on July 23 in a new relief program for homeowners.
6. Expand your network to widen your job search
Job openings in July reached an all-time high of 10.1 million, the third straight month of record-breaking job openings, according to the Department of Labor. At the same time, no industry or sector has reached its pre-pandemic unemployment level, according to Nick Bunker, economic research director at the Indeed Hiring Lab. Leisure and hospitality, for example, is down 10 percent compared to its February 2020 level.
Stay hopeful, and be creative with your job search. Consider tapping into and expanding your current network of contacts to learn of future opportunities. It pays to do your research.
“Look for any viable means of generating income, including finding another job,” says Mark Hamrick, Bankrate’s senior economic analyst. “Some businesses and sectors are faring better than others right now.”
7. Seek assistance from charities, local nonprofits, family members
Charities or nonprofits in your local area might be a good place to turn if you need extra help, either for covering expenses or purchasing day-to-day essentials. Nonprofit debt counseling groups could also help you identify ways to address your individual financial needs.
8. Make sure you withheld taxes from UI
You might not know that you have to pay federal and, in some cases, state taxes on what you receive in unemployment benefits. Withholding that now, instead of pushing it down the road through a quarterly payment, might help prevent you from having to pay it at a time when you are more strapped for cash, especially after the $300 benefit ends. To do this, you’ll have to file a Form W-4-V.
“You’re going to have some sticker shock” if you wait, Evermore says.
The Biden administration’s American Rescue Plan from March excluded the first $10,200 worth of Americans’ unemployment benefits from federal income taxes in 2020 so long as their income wasn’t above $150,000. Whether that’s extended for 2021’s tax season is still up in the air.
The Internal Revenue Service (IRS) has disbursed more than 8.7 million unemployment compensation refunds totaling over $10 billion since May, according to a July 28 release.
9. Keep an eye on Capitol Hill for future extensions
The U.S. economy may be recovering, but the labor market is not out of the woods. If the pandemic persists, particularly at a time when new caseloads are surging amid the more contagious Delta variant, lawmakers may be on the clock to extend benefits at some point.
As of now, however, that appears to be unlikely. Biden indicated in a June 4 speech after the May employment report that the current Sept. 6 sunset date “makes sense.” White House Press Secretary Jen Psaki also suggested that the administration would not prevent states from curbing unemployment benefits on their own.
“Every governor is going to make their own decision,” she said during a June 4 press conference.
Of course, no one can predict the future. That’s even more true for what goes on in Washington.
That’s why taking these steps — and other recession-proofing options in general — are crucial. Getting your finances in order now can help you build a solid foundation, in the unfortunate event that benefits aren’t ever extended. That way, you’re financially able to weather the storm until you find a new job.
“Predicting the behavior of elected officials in Washington, or elsewhere, is precarious,” Hamrick says. “Americans should prepare as if they might not get further benefits but keep an eye out for further developments.”