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Unless Congress acts soon, an estimated 750,000 Californians will lose their unemployment benefits next month, putting severe financial strain on thousands of households and potentially undermining the state's already fragile economic recovery.
That estimate comes from a new report released today by researchers with the California Policy Lab.
UCLA economist Till von Wachter, one of the authors, said these benefits have so far played a crucial role in propping up California's economy at a time of record-breaking unemployment. Phasing them out could lead to widespread damage.
"These benefits will be needed to pay for rent and necessities," von Wachter said. "We are looking at a large number of people who might be really hurting, and that is likely to hurt the overall economy as well."
TWO FEDERAL PROGRAMS SLATED TO END ON DECEMBER 26
The so-called "unemployment cliff" will arrive on Dec. 26 with the sudden expiration of two temporary pandemic assistance programs created under the federal CARES Act.
Most of those losing benefits next month will be freelance and contract workers relying on Pandemic Unemployment Assistance (PUA), a program that provides benefits to non-employees who are ineligible for traditional unemployment insurance. The researchers estimate more than 580,000 Californians will lose PUA benefits at the end of December.
A smaller group of Californians -- close to 170,000 -- will be cut off by another expiring program called Pandemic Emergency Unemployment Compensation (PEUC). That program provides up to 13 weeks of additional benefits for those who've exhausted their original unemployment insurance claims.
During the early phases of the pandemic, lawmakers moved quickly to create PUA and PEUC as a way of broadening the unemployment system to workers who would normally be excluded.
But they designed those programs as a temporary solution. Without further action from Congress, hundreds of thousands of Californians could be left to fend for themselves at a time when job prospects are low and COVID-19 cases are surging.
Michael Hayes, a former Lyft driver who lives in Torrance, has avoided rideshare work during the pandemic due to underlying health issues. He suffered a stroke 10 years ago that left him partially paralyzed.
Lately, he's been collecting $167 per week in PUA benefits. Hayes said if those benefits aren't renewed by the end of December, he may have to get behind the wheel again -- despite the potential health risks.
"I would probably consider going back and driving for Lyft for a short time," he said, "with a plastic shield, windows down, probably some type of high-end mask. Because I have to make ends meet. I have to feed my son."
NON-WHITE WORKERS MORE LIKELY TO LOSE BENEFITS
Von Wachter, the UCLA researcher, said current unemployment data suggests that younger workers, women and non-white workers face higher odds of losing their benefits under various programs.
"Those are of course the groups that have seen the largest increase in unemployment and had the lowest unemployment benefits," he said. "And now they're going to be hit by a greater likelihood of exhaustion."
More than 60% of Latino and Asian PUA recipients are projected to fall off the benefits cliff in December.
Other unemployed Californians will continue to receive payments if their past earnings qualify them for a different extension program called Federal-State Extended Duration (FED-ED). But a second unemployment cliff will come in May of 2021, when an estimated 390,000 recipients will lose their benefits after exhausting that program.
Racial disparities persist in that second wave of exhaustions. The researchers estimate that more than 1-in-4 Black workers will lose benefits in mid-May before finding a new job, compared to less than 1-in-5 White workers.
