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Long-Term Jobless Face Tough Choices as States Cut Off Benefits

July 2, 2021, 9:31 AM

Getting back to work hasn’t gone as planned for Douglas Vernon after the Covid-19 pandemic shut down the Georgia resident’s independent business as a chef consultant.

Before the pandemic, Vernon helped restaurants in Savannah and Hilton Head, S.C., that didn’t have a chef in house develop recipes and pricing, and he was earning about $135,000 a year. The virus took that work away, leaving him with $665 per week in federally funded benefits from programs Congress created in response to the pandemic, a fraction of his former pay.

Now, Georgia has ended those benefits for Vernon and other jobless residents. It is among 26 states where governors decided to cut off payments two to three months before the early September date set by Congress, due to worker shortage complaints from businesses and chambers of commerce.

“Restaurants, of course, have been decimated. They’re still not back,” Vernon, 53, said in a phone interview on June 23, a few days before his home state stopped distributing the federal pandemic unemployment benefits. “They’re all saddled with so much debt that they’re not in a position to spend that money” on a consultant.

His job struggles show the complexities of moving long-term unemployed people off government benefits and back into the workforce as businesses reopen more fully and look to hire. Vernon, who’s worked in restaurants for 40 years, expects his consulting business will return eventually and said it doesn’t make sense to change careers.

“It’s just a deeper problem than most people realize,” he said.

Decisions by states to end benefits could affect millions of out-of-work Americans. More than 3.7 million people in the U.S. are considered long-term unemployed—defined as 27 weeks or longer—as of May 2021, according to Federal Reserve data.

More Than 200,000 in Georgia

The scope of the unemployment crisis spurred by the pandemic was enormous. About 49 million Americans received at least a week of unemployment benefits between March 1, 2020, and March 31, 2021, although holes in the system meant at least another 9 million applicants never received a payment, according to a Bloomberg analysis.

Congress created new programs in March 2020 that lengthened the duration of benefits, boosted the weekly dollar amount—initially by $600, before that bonus expired last July and was later replaced with a $300 supplement—and provided aid to gig workers and self-employed people who don’t qualify for traditional unemployment benefits.

Georgia ended its participation in all the federal programs June 26, cutting off 167,000 people still claiming the gig worker aid or extra weeks of benefits. Another 56,000 Georgians who are receiving traditional benefits lost the $300 weekly federal supplement that Congress extended via the American Rescue Plan Act in March.

Like Georgia, most of the 26 states that announced plans to end federal benefits have halted them by now. A handful including Tennessee and Maryland will end them this month. Governors in at least three states have been sued over their decisions to do so. An Indiana judge on June 25 ordered Gov. Eric Holcomb (R) to resume that state’s participation in the federal programs—a decision Holcomb has appealed.

Like two dozen other Republican governors, Holcomb said the higher-than-usual federal benefits were causing companies difficulty in finding enough workers.

But labor unions, progressive economists, and White House officials under President Joe Biden argued that people face legitimate obstacles to working, such as limited access to child care, and that low-wage service jobs should raise pay to attract more workers.

“After sixty-six weeks of benefits during the pandemic and the release of over $22.5 billion, we look forward to refocusing our organization on reemployment and helping claimants find a career path that will provide the stability and support necessary to provide for their families,” said Georgia Labor Commissioner Mark Butler (R), announcing the end of the federal programs in his state.

Georgia officials say there are ample job openings for those who are losing benefits. The state’s EmployGeorgia database included 221,000 job listings as of Butler’s June 24 announcement.

Skills Mismatch

But available job openings may not fit the skills of unemployed workers. That was the problem for Melissa Abbott, who lives in metro Atlanta.

Abbott, 53, collected unemployment benefits and searched for work off and on since April 2020, before finally being called back three weeks ago to a job at her previous employer Blue Sky Exhibits, a design and service provider for trade shows.

She has worked in that industry her entire career. “When somebody looks at my resume, they’re going to see trade shows. That’s it.”

Abbott applied and interviewed for account manager positions in other industries. Interviewers either couldn’t see how her skills would transfer or they were concerned she would leave and return to her old job when trade shows resumed, she said.

“It was hard to decide. Do I go back to school? Look at how old I am. By the time I get done with school, this will be over,” Abbott said. “Do you want to spend the money on school, even if you have it?”

Other job openings that might have been easier to land didn’t pay well. “Nobody wants to go from making $70,000 or even six figures to making $15 an hour or less,” she said. “It doesn’t even pay the bills.”

The U.S. Chamber of Commerce was among those urging state and federal officials to end the extra $300 benefit to nudge people back to work. The chamber estimated in May that one in four unemployment recipients were getting more money through jobless aid than they previously earned in their jobs.

A chamber survey that same month, however, found a wide range of reasons why people haven’t returned to full-time employment, with 61% saying they’re in no hurry to return to work and 23% saying they lack the needed skills or experience for most job openings.

Child-care or other family-care needs made it difficult or impossible for 24% to seek full-time work now, and 16% said the amount of their unemployment benefits made it “not worth” looking for a job, according to the chamber survey.

The survey confirmed the unemployment benefits are among the factors deterring jobless Americans from going back to work, it said in a statement summarizing the survey results.

“In many states, due to federal supplemental unemployment benefits, Americans are earning more by not working than they would by working,” the chamber said.

Doctor’s Orders

Tyler Evans waited more than a year to return to his bartending job in Nashville, Tenn., where he used to make $2,500 per week including tips—six times the amount of his unemployment benefits, he said.

Most of those benefits are set to end July 3, when Tennessee stops its participation in the federal programs.

Evans was on medical leave until he got fully vaccinated because his doctor warned that his multiple sclerosis would make him more vulnerable to Covid-19. After his disabled older brother died in late March and left behind funeral costs, Evans tried returning to work only to find the health risks were too high for him—with mostly unmasked customers in the crowded bar and Tennessee’s vaccination rate among the lowest in the country.

Evans’ furlough from the bar turned into a permanent termination and is now the subject of a lawsuit, which he said he couldn’t discuss in detail.

His brother’s death wiped out the savings Evans was planning to live on in the event he lost unemployment benefits. “Within the span of a month I lost my savings and the job I was planning on going back to,” he said.

The “only saving grace,” Evans said, is that he’s gone back to school during the pandemic to add special skills and certifications to the accounting degree that he already had, including studying finance and health-care management.

“My only chance will be to finish school within a month and find a job in a setting that my doctor deems safe,” Evans said. “I don’t have the luxury to sit around and think about it. I have to finish school.”

To contact the reporter on this story: Chris Marr in Atlanta at cmarr@bloomberglaw.com

To contact the editors responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com; Travis Tritten at ttritten@bgov.com; Andrew Harris at aharris@bloomberglaw.com

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