Even as fewer Washingtonians filed for unemployment last week, experts warned that preelection politics could hold up much needed federal funds for the hundreds of thousands of state residents already left jobless by COVID-19.
“Neither party wants the other to look good right now,” said economist Hart Hodges, a director of the Center for Economic and Business Research at Western Washington University, referring to the fraught negotiations between Congress and the White House over a new round of pandemic relief.
The delays come as the state Employment Security Department (ESD) reported a 24.3% decline in new, or “initial,” claims for regular unemployment insurance last week, to 16,890, compared to the prior week. Nationally, new jobless claims fell by 6.5%, to 787,000, for last week, according to the U.S. Labor Department.
Yet Washingtonians are still filing new claims at nearly three times the rate of a year ago, and the total number of people collecting benefits — 304,917, as of last week — remains at near-record highs.
Washington has one of the most generous unemployment programs in the country. Even so, because an emergency federal benefit of $600 a week expired in July — and because a divided Congress has yet to extend it — most claimants are getting benefits that average around half or less of what they were making before losing their jobs.
Negotiations to extend federal unemployment benefits, as part of a broader round of federal relief, have stalled, in part, over major differences about the scale of the relief package. Democrats initially pushed to extend the $600 weekly benefit; some Republicans pushed for just $200.
Some observers see a chance that a deal might be struck after the Nov. 3 elections. Recent media reports suggest that Steven Mnuchin, President Trump’s treasury secretary, is close to a deal with Nancy Pelosi, speaker of the Democrat-controlled U.S. House.
According to U.S. Rep. Pramila Jayapal (D-Seattle), Pelosi “has gotten [Mnuchin] up to $400” for a weekly benefit.
But the question, Jayapal said, is whether “Trump and Mnuchin can deliver the Senate.” Senate Majority Leader Mitch McConnell (R-Kentucky) has said he opposes a large relief bill and has warned against moving any relief bill before the Senate has confirmed U.S. Supreme Court nominee Amy Coney Barrett.
The stakes are large. The strong early recovery in May, June, July, and August, when Washington added an average of 82,525 jobs a month, was fueled, in part, by the $600 benefit, which helped many households maintain the spending that is critical to economic growth. By contrast, in September, just over a month after the $600 benefit expired, employers added just 2,400 jobs.
Nationally, most economists expect growth to continue to slow in the final three months of the year unless Congress can agree on a significant new relief package. Across the economy as a whole, that likely would mean more prolonged recovery of the jobs and output lost to COVID-19 in Washington and other states.
But the delay also would have severe effects on the individual level, especially in lower-income households. Not only do these households typically have less in savings, but they’re more likely to have lost jobs to the pandemic, which fell disproportionately on lower-wage sectors, such as hospitality and retail, said economist Debra Glassman, a principal lecturer of finance and business economics at the University of Washington Foster School of Business.
While the $600 payment lasted, “some households were able to save some of the extra money, and this helped tide them over” when the those benefits expired, Glassman said. But as those savings are depleted, she added, “the hardship will be felt.”
Even if Congress delivers a new round of unemployment relief sooner rather than later, it’s no guarantee for a swift recovery unless consumer-safety concerns over COVID-19 also have been addressed.
“Unemployment benefits have played a significant role in state’s economy over the last 6-7 months,” Hodges said. “But more stimulus does not mean all jobs will come back in a hurry. You can give folks money, but that may not make them comfortable going to restaurants like they did last year.”