More than 44,000 Iowans who have exhausted their state unemployment benefits face a severe financial crisis if a federal safety net is allowed to expire in late December, economists say.
The federal CARES Act went into effect in March, providing additional jobless benefits to workers, including those who had used all of their state jobless benefits. The programs, which had been extended, are set to expire on Dec. 26 unless another stimulus bill is passed by Congress.
In Iowa, 44,592 people’s state unemployment benefits ran out in July through October, the most current state data shows. Thousands of others likely lost benefits in November, although state data was not available. Those Iowans – and millions of Americans – will be without any income if the federal jobless benefits are not extended.
“Congress’s inability to enact timely continued assistance to distressed households across a range of categories, not just unemployment assistance, is more than political failure, it is a social and economic failure,” David Swenson, an Iowa State University economist, wrote in an email.
The federal aid has helped sustain families whose wage-earners lost jobs for pandemic-related reasons, Swenson wrote. Without the additional assistance, “people will be forced to run up credit card debt to cover essentials, further limiting those families’ ability to recover once the economy starts hiring again.
“Foreclosures and evictions will rise as people get further and further in arrears in their mortgages or rents.”
In addition to the adverse effect on individuals, the loss of jobless benefits also will also slow the nation’s economic growth, according to Ben Ayers, a senior economist with Nationwide.
A loss of the additional benefits “represents a significant risk for overall spending at the start of 2021,” according to Ayers.
Some Iowans have already exhausted all of their state and federal jobless benefits, state data shows.
More than 12,600 Iowans saw their federal jobless benefits run out in July through October and nearly 1,900 exhausted their extended state benefits, a program that ended on Oct. 31.
According to data released today by Iowa Workforce Development, the number of Iowans who filed unemployment claims last week fell to 39,771, the lowest number of claims filed since mid-March when the pandemic began, reported today.
Last week was also the first time during the economic slowdown that fewer than 40,000 Iowans filed unemployment claims.
Ayers, in an email, wrote that a portion of the decline – both in Iowa and nationally – could be attributed to workers exhausting their jobless benefits.
While there eventually will be new employment opportunities for “displaced workers, the loss of skills due to extended unemployment could inhibit reentry into the workforce,” according to Scott Murray, a Nationwide economist.
Other data reported by Iowa Workforce Development for the week that ended on Saturday:
- 5,593 Iowan filed initial unemployment claims, a 37% decline from the 8,930 who filed first-time claims the previous week. Nearly 28%, or 1,273, of the claims were filed by people who worked in construction; another 17.5% were filed by people who worked in manufacturing.
- $8.1 million in jobless benefits was paid out of the state’s unemployment compensation trust fund. Since mid-March, Iowa has paid out more than $1.02 billion in unemployment claims.
- $869,400 was paid in Federal Pandemic Unemployment Compensation benefits, which were retroactive payments as the program ended July 25. Since April 4, a total of $1.62 billion in benefits have been paid from the fund.
- $3.3 million was paid in Pandemic Unemployment Assistance benefits. Since April 13, $153.8 million has been paid from the fund.
- $7.6 million was paid in Pandemic Emergency Unemployment Compensation benefits. Since May 27, a total of $149.1 million in benefits has been paid from that fund.
- $29,006 was paid in State Extended Benefits. Since July 21, $17.56 million has been paid in extended benefits. The program ended Oct. 31.
New unemployment claims filed in week ending Oct. 31: 751,000
People continuing to receive jobless benefits for week ending Oct. 24: 7.2 million
Advanced seasonally adjusted unemployment rate for week ending Oct. 24: 5%
Note: The continuing claims and unemployment rate lag by a week from initial claims filings.
Source: U.S. Department of Labor