- The economy is rebounding, but millions of Americans are still out of work.
- The Delta variant threatens to set back the pace of the recovery as jobless aid programs and an eviction freeze end.
- “It’s like a double hit,” economist Claudia Sahm said. “This is the ending that fits the crisis.”
- See more stories on Insider’s business page.
The American economy is growing, but it’s splitting between flourishing workers and those falling on difficult times.
Indeed, it has recovered from devastating depths it reached last year. Earlier this year, President Joe Biden touted the summer as a time for Americans to declare independence from a pandemic that’s held a fierce grip over their lives. Easing restrictions was also supposed to mean a return to normalcy and with it a resurgent economy.
But it hasn’t panned out like that since. Millions of Americans remain out of work and unable to land a job even in a rebounding labor market. The rise of the Delta variant is stymieing the speed of the recovery, reflected in a disappointing August jobs report and early signs of Americans pulling back on air travel and spending at restaurants.
On Thursday, Biden outlined steps to mandate swaths of the private and federal workforces to get a COVID-19 shot. He also said in a statement “the Biden plan is working” as weekly unemployment claims tumbled to a new pandemic low.
Resistance from moderate Democrats has doomed any renewal of the federal unemployment programs that expired on Labor Day, along with an eviction moratorium the Supreme Court struck down last month. At least 7.5 million people lost all their federal jobless aid, per an estimate from the left-leaning Century Foundation. Congress and the Biden administration aren’t stepping in to provide new aid as virus infections top 150,000 a day and hospitalizations soar. Experts warn it may set the stage for a slower recovery.
“There are enough people in the Biden administration now who should remember this mistake when they were in office under Obama,” William Spriggs, a professor at Howard University and economist for the AFL-CIO, said in an interview. “This tendency to want to declare economic victory and take a victory lap is problematic – in part because you’re gonna slow the recovery.”
Claudia Sahm, a former Federal Reserve economist, said jobless people had been “jerked around” in the pandemic with arbitrary deadlines causing the government to pull the plug on their benefits. “It’s like a double hit,” she told Insider. “The whole thing has been so tough on the unemployed. This is the ending that fits the crisis.”
The White House declined to comment on the record. White House press secretary Jen Psaki has pointed to the child tax credit as an alternative source of federal aid, and administration officials say states can renew federal unemployment programs on their own. None have done so.
‘They did it exactly backwards’
The latest jobs report showed the economy recouping 235,000 jobs, a sharp slowdown from the month before when over a million jobs were added. Nick Bunker, an economist at Indeed, noted that leisure and hospitality industry, a sector that had experienced strong growth prior to Delta.
“This has Delta variant written all over it,” he wrote on Twitter. The renewed spread of the virus threatens to dent the recovery of the service sector and continuing to sideline workers through school closures or lack of childcare.
“We’re heading into winter in the midst of an enormous uncontrolled surge of COVID,” Julia Raifman, an associate professor at Boston University, told Insider. “All the people who lost their work in travel and leisure early on in the pandemic are again at risk of not finding work.”
Conservatives have assailed the Biden administration’s economic response to the pandemic, blaming generous federal benefits from direct payments and jobless benefits in the Democratic stimulus law for a shortage of workers.
“They did it exactly backwards,” Casey Mulligan, a former Trump administration economist, said in an interview. “If that’s the concern, I’d say take your hand away from the money shovel so you don’t destabilize things.”
For many unemployed Americans, however, a steady flow of government cash helped them put food on the table, keep up with rent or medical bills and stay housed during a deadly pandemic. In addition, early research indicates the end of federal unemployment benefits didn’t lead to a major surge in hiring in GOP states that ended programs this summer.
‘I thought the one party in control was for the people’
Aaron Davison, 28, was furloughed from his job as a turnstile attendant at Universal Studios in Orlando, Florida, early last year. Davison had relied on the enhanced unemployment payments to cover the cost of the hotel room where he’s lived in with his parents for over a year, along with a GoFundMe he set up. That money is starting to dry up.
He’s applied only to remote jobs because he doesn’t want to infect his 64-year-old mother Emily, who has multiple sclerosis and diabetes. She’s had five hospital visits in the past year, straining their finances as medical bills mount and they struggle to pay them without health insurance.
The Davison family recently renewed their hotel stay until October 11, but they may have no choice but to move into their compact SUV after that if Aaron can’t find work.
Davison said he feels policymakers have ignored jobless people like him as they pivot to other priorities. Democrats are prioritizing the passage of a $3.5 trillion social spending plan this month, full of provisions they hope will transform the economy and help them safeguard their wafer-thin House and Senate majorities ahead of the 2022 midterms.
“Now there’s just a push for climate change and other agenda topics, and the unemployed people are neglected,” Aaron told Insider. “I thought the one party in control was for the people. I guess I’m wrong because they very well could not be in control in 2022. I think 10 million unemployed Americans will remember they were neglected.”