Federal unemployment checks will cut off in weeks. Here’s what might happen next.

What might happen, why some politicians oppose them, hiring is up and so are beer sales, and some people are not interested in returning to the office

July 8, 2020

Covering COVID-19 is a daily Poynter briefing of story ideas about the coronavirus and other timely topics for journalists, written by senior faculty Al Tompkins. Sign up here to have it delivered to your inbox every weekday morning.

Federal unemployment checks will cut off in weeks. Here’s what might happen next.

At the end of this month, 29 million of your readers, viewers and listeners will see the end of the $600-a-week federal unemployment check unless Congress extends the program. It might.

Marketplace explored what’s next:

Those payments have replaced 10% to 15% of Americans’ pre-pandemic income. If the money’s cut off at the end of July, Michele Evermore at the National Employment Law Project said nearly 30 million unemployed Americans will be thrown back onto state benefits alone.

The federal unemployment checks, coupled with the one-time $1,200 stimulus checks, help to explain why personal income rose 10% in April even while unemployment rose, too.

What might happen

There are lots of proposals floating around Congress. You should start nailing down your delegation to find out where members stand.

Senate Majority Leader Mitch McConnell said Republican senators will not vote for a replica of the original federal unemployment bill. He said the $600-a-week jobless payments encourage people not to return to work.

Democrats aim to extend payments past the election. A bill sitting in the House Ways and Means Committee would extend the payment until the end of January 2021.

Another bill, The Worker Relief and Security Act, is a bit more complicated. Generally, it extends benefits, but the amount would vary from state to state depending on the level of unemployment in that state.

There would be six tiers. Workers in the states with the lowest unemployment would get $350 in federal unemployment payments but the payments would gradually go down. Unemployed workers in states where jobs are harder to come by would see $450 in federal unemployment. If the unemployment in their state improves, they could see jobless benefits drop. The whole point of this plan is to recognize that some places are being harder hit economically than others.

Some senators suggested that any new unemployment help should go to prop up state benefits.

President Donald Trump has gotten some GOP support for a “back-to-work bonus” plan that would give a cash bonus to people who do find a job.

CNBC reported on two other ideas:

One from Sen. Rob Portman, R-Ohio, would replace the $600 weekly checks with temporary payments of $450 a week for those who return to work. Recipients would get the $450 plus their job’s wages.

Another proposal, from Rep. Kevin Brady, R-Texas, would let workers who accept a job offer keep two weeks’ worth of $600 enhanced unemployment benefits. Normally, if someone finds work, they would lose their unemployment benefits. The concept is comparable to a $1,200 “hiring bonus,” Brady said.

The Senate is adjourned until July 17, but as soon as it comes back into session things will heat up fast. Now, when senators are in their home districts, would be a good time to track them down and get them on the record.

You can bet that it will be a rare individual running for office in 2020 who will not support some version of an extension to federal unemployment.

Why and why not extend federal unemployment benefits?

Forbes dove in to explain the ups and downs of extending federal unemployment benefits:

According to a working paper from the Becker Friedman Institute for Economics at the University of Chicago completed in May, two-thirds of unemployment insurance eligible workers may be receiving benefits that exceed their regular earnings. That includes 20% earning twice their regular pay.

That’s not hard to imagine considering that according to the Federal Reserve, an estimated 40% of those currently on unemployment normally earn less than $40,000 per year. A $200 per week state unemployment benefit — plus the $600 federal benefit — means that a worker typically making $400 per week could be collecting $800 from the combined unemployment benefits.

A separate study from the Congressional Budget Office found similar results. The CBO said five out of six workers eligible for federal unemployment benefits would earn more taking unemployment then they would at their old jobs.

But a reason for extending the benefits is that COVID-19 cases are rising in much of the country, and that is leading to the reclosing of businesses. And while some people are touting ideas about spending money to retrain workers, the fact is people didn’t lose their jobs because they were unskilled, as they might have in a more routine recession. They lost their jobs because of a pandemic.

Forbes shared worse news:

“We estimate that 42% of recent pandemic-induced layoffs will result in permanent job loss,” said Prof. Steven J. Davis, of the University of Chicago Booth School of Business. “If the economic shutdown lingers for many months, or if serious pandemics become a recurring phenomenon, there will be profound, long-term consequences for the reallocation of jobs, workers, and capital across firms and locations.”

Hiring jumped up

It is hard to look at the above story and fit it next to data out of the Department of Labor on Tuesday. A survey that economists watch called the Job Openings and Labor Turnover Survey, or JOLT, said hiring surged in April and separations (layoffs and furloughs) slowed way down — nearly 60%.

Let’s keep in mind, that was April. That is when some restaurants and other hospitality businesses were slowly reopening. Since then, we have seen a surge in new COVID-19 cases.

But here is another number from JOLT: The month ended with four unemployed Americans for every job opening.

Beer sales are up, but so is cheap beer

Both craft beer and cheap beer sales are up during the pandemic even while university towns are not pulsing with parties. It seems as though even if money is tight, some people cannot give up those things they hold dear. NPR’s Planet Money is on the story:

During recessions, cash-strapped consumers flock to cheap stuff like instant ramen noodles, used cars or Netflix as an alternative to going to the movies. This has also, to some extent, been historically the case for lower-priced beer, wine and spirits, says Patrick Livingston, an analyst at IRI. “But what’s interesting about this current period is that we have really not seen that effect set in,” he says.

While cheap beer sales are up, overall beer sales are up even more. There’s been a 27.5% increase of beer sales in stores over the same period last year. And so, while lower-priced beer has seen a surge, it has actually been losing market share, according to IRI’s data. Subpremium beer is lagging behind imports, which are up 15%, and craft beer, which is up almost 23%. Cheap beer is also lagging way behind “hard seltzer,” like White Claw, which is relatively expensive and has seen a 246.7% increase when compared with this time last year. All these surges in purchases of more expensive beverages are a part of a trend beer biz folks refer to as “premiumization.”

Some people say they would like to “never go back to the office”

A lot of workers are not planning to head back to the workplace. Yahoo Finance wrote:

4% of workers aren’t comfortable going back to work in the next month — or more, according to a Citrix poll. A survey from Korn Ferry found that fewer than a third of workers said it’s “highly likely” they’ll be back when it reopens; and half said they’re fearful to return due to health reasons, but most said they trust their employer to do a good job.

Workers appear to be ready for more blends of WFH/in office, with 59% of people expecting to work from home more often (3 days a week or more), according to a recent survey from Piper Sandler. Furthermore, surveys show that people are investing in their WFH setups even as reopening progresses.

A survey from Korn Ferry, a global organizational consulting firm, found:

Even when they are cleared to do so, many professionals say they will not be going back to the office, with half saying they are afraid to return.

Fewer than a third (32 percent) say it is highly likely that they will return to their office when it re-opens. Half (50 percent) say they are fearful of going back due to health concerns, even though 75 percent say they believe their employer will create a safe and healthy work environment for them.

Forty percent of respondents say their employer will not make it mandatory that they return to the office.

You know you are hunkered down for the long run when you, like me, buy old office furniture and restore if for your new “bedroom office.”

Nurses warn of a new PPE shortage

Deborah Burger, president of National Nurses United, is warning that the rise in COVID-19 cases has created a new shortage of protective gear.

And doctors’ offices are closing because they cannot get enough supplies.

The Associated Press reported that the nurses union surveyed members and learned that nurses, once again, are being urged to reuse protective gear that should be worn once and thrown away.

How long would a COVID-19 vaccine last?

Of course, the answer to this question is “we do not know.” But Dr. Anthony Fauci said if and when we get a COVID-19 vaccine it will likely only be good for a short duration, not unlike our current flu vaccines.

“It’s not going to be like a measles vaccine,” he said. “So there’s going to be follow-up in those cases to see if we might need a boost. We might need a boost to continue the protection, but right now we do not know how long it lasts.”

Are you getting tired of covering COVID-19?

The Atlantic ran a piece this week on how COVID-19 experts are getting tired of issuing the same warnings and dreary outlook week upon week.

The pandemic made me move

COVID-19 has been at the core of why one in five Americans moved this year. Most of them are young people. They may have lost jobs, could not live at school or needed to care for a family member.

(Pew Research Center)

We are not near the end of this pandemic. Not near. Dr. Fauci said we are “knee-deep” in the first wave.

Banning TikTok?

Another story Americans are obsessing about is whether they might lose TikTok, which is just about the only thing keeping us sane right now.

Secretary of State Mike Pompeo said this week that the Trump administration is considering banning TikTok and other Chinese social media apps from being used in the United States. India has already banned it.

TikTok is owned by Beijing-based ByteDance. Washington has been concerned that the platform censors content and that the Chinese government might access its data. Wired wrote:

… TikTok openly discloses in its privacy policy that it will “automatically collect certain information from you when you use the Platform …

At the core of this is a concern about how much digital information all apps, even American-made ones, collect data without users knowing it.

Mask tirades

To close today’s column, let’s point to this collection of people throwing fits over masks.

I appreciated this piece from WWMT in Michigan that turned to an anxiety treatment center to try to find out why some people are so anxious about wearing masks. Apparently it is a real “thing” that wearing a mask makes some people anxious, feel closed in and have trouble breathing.

The story reminded me that to those of us who don’t mind wearing a mask, we cannot know what other people feel. We all have phobias and quirks. It does not mean we can refuse to wear a mask in a pandemic, but we can have some understanding.

On the other hand, some people are just, you know, jerks.

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Al Tompkins is senior faculty at Poynter. He can be reached at atompkins@poynter.org or on Twitter, @atompkins.