Millions of Americans on unemployment are staring down the edge of a cliff, with the $600 a week federal Pandemic Unemployment Assistance set to wind down at the end of the month in the absence of congressional action. On top of that, some states are now making it harder to qualify for unemployment benefits by reinstituting a requirement that applicants prove they’re looking for other jobs in order to collect.
Garrett Honey was furloughed from his job as a test engineer for a casino software company in Denver when lockdowns started in March. He’d been collecting unemployment and waiting on his company to call him back when a week ago he got a letter from the Colorado unemployment agency.
“And all it says is, hey, you have to find a new job. You have to start looking for one, otherwise, you won’t get unemployment,” he said.
To continue to receive benefits, he’d have to complete five work-search activities each week: applying for jobs, going to interviews, and accepting a job if it were offered.
That put him in a tough spot. Job openings in his field are really hard to come by with the pandemic keeping most casinos closed or at low capacity, and he’d hoped to keep his old job.
“That caused a lot of panics last week,” he said.
Work search requirements were suspended by most states during the initial weeks of the crisis, but Colorado, along with Nebraska, Arkansas, and Missouri, has reinstated them in recent weeks.
“You don’t want to discourage people from working if jobs are available,” said Angela Rachidi, a scholar at the American Enterprise Institute. In normal times, she said, work search requirements are intended to motivate unemployed people to rejoin the labor market rather than remain on government assistance.
In the early days of the pandemic, people were supposed to stay home, not be out looking for jobs, so it made sense to do away with the requirement.
“But now we’re in this kind of gray area of recovery,” said Chris O’Leary, senior economist at the Upjohn Institute for Employment Research. While the most stringent lockdowns have eased and some sectors of the economy have reopened, we’re not back to normal, he said.
“It’s kind of on-again, off again — yeah, we’re going to have to return to work. Oh, wait a minute — the virus is spreading. Maybe we can’t,” he said.
There’s still enormous uncertainty in many industries, like Garrett Honeys. And while the states that have reimposed job search requirements are not hot spots right now, the last months have taught us how quickly things can go bad with a virus that is spreading out of control. A temporary basic income for the world’s poorest 2.7 billion people in 132 developing countries could help slow the spread of the coronavirus by allowing them to stay home, according to a U.N. Development Programme (UNDP) report released on Thursday.
The report suggests three options - top-ups on existing average incomes, lump-sum transfers linked to differences in the median standard of living across a country, or uniform lump-sum transfers regardless of where someone lives in a country.
“Unprecedented times call for unprecedented social and economic measures. Introducing a temporary basic income for the world’s poorest people has emerged as one option,” said UNDP Administrator Achim Steiner. “Bailouts and recovery plans cannot only focus on big markets and big business.”
The coronavirus has infected at least 14.8 million people and there have been more than 610,000 known deaths worldwide, according to a Reuters tally. The United Nations has warned that the pandemic and associated global recession could trigger an increase in poverty worldwide for the first time since 1990 and push 265 million people to the brink of starvation.
The UNDP report suggests that one-way countries could pay for a temporary basic income would be repurposing billions of dollars that would have been spent servicing their debt.
The Group of 20 major economies in April agreed on a suspension of debt service payments for the world’s poorest countries until the end of the year. However, U.N. Secretary-General Antonio Guterres has called for debt relief to be offered to all developing and middle-income countries.
The G20 Debt Service Suspension Initiative has proven challenging to implement, with only 42 of 73 eligible countries expressing interest thus far, saving just $5.3 billion in service payments instead of the $12 billion initially promised.