Amanda Riley’s timing couldn’t have been worse.
The paraeducator from Vancouver is filing for unemployment benefits because her job at Evergreen Public Schools may go away temporarily if this fall’s classes are done online in response to new concerns about COVID-19.
But Riley is also aware that the extra $600 in weekly pandemic benefits many jobless workers have gotten since April probably won’t be there for her after Congress just let it expire.
Riley says her regular unemployment benefit will be around $200 a week, or less than half a normal paycheck. Even with her husband’s commission income, the household budget will be tight. “That $600 per week would definitely help,” she says.
Riley could be speaking for nearly 400,000 workers in Washington state.
As the state’s economy slides into its fifth month of pandemic restrictions, workers and employers alike face a possible tipping point.
The surge in rehiring from May and June appears to be stalling as new coronavirus cases threaten to pause efforts to re-open the economy.
That risk is clear in the numbers of people still filing for jobless benefits.
For the week ending July 25, the state Employment Security Department (ESD) said Thursday it has received 28,840 initial claims for regular unemployment benefits. That’s roughly the same number it has gotten for eight of the last nine weeks, and is still roughly twice the weekly average back during the Great Recession.
Nationally, new weekly jobless claims rose marginally, to 1.4 million, the U.S. Labor Department reported.
The potential cooling of the state’s economic rebound is also clear in moves by schools to go online this fall, and decisions by big employers, such Google, to further extend work-from-home policies that already have devastated small businesses in urban centers.
It’s evident, too, in recent news that Boeing will slow a planned ramp-up of 737 MAX production and cut output of widebody jets in Everett, and that Port of Seattle is suspending planning for a new cruise terminal at Terminal 46.
What we’re seeing, says Seattle economist Debra Glassman, is a kind of one-two punch for an economic recovery that was already wobbling.
First, the recent surge of coronavirus cases poses the risk of more shutdowns and “renewed consumer reluctance to go out and spend,” says Glassman, a principal lecturer of finance and business economics at the University of Washington Foster School of Business.
At the same time, she says, the state is getting slammed by “the spillover/indirect effects” as earlier shutdowns of consumer-oriented sectors, such as hotels and air travel, have rippled into secondary sectors, such as Boeing and other manufacturers.
Those dynamics are one reason the nation as a whole saw the sharpest economic contraction on record for the second quarter, which shrank by 32.9% on an annualized basis, the U.S. Commerce Department reported Thursday.
And yet, precisely at the moment the economic recovery in Washington and elsewhere may be faltering, the $600 weekly benefit, one of the key policies credited with helping stop things from getting worse, may be disappearing.
Jake Vigdor, an economist at the UW’s Evans School of Public Policy & Governance, said the $600-a-week benefit, combined with other short-lived stimulus such as Paycheck Protection loans to small business, kept money flowing through the economy even after many workers’ wages dried up.
But “now we’re facing … a world where all that extra money is gone,” Vigdor said. “And that lower income for people is going to turn into lower revenues for businesses, and that’s going to threaten a new downward spiral, where you have more businesses that are going to decide, ‘Hey, I gotta shut down at least temporarily, because I’m losing too much money,’ and that is potentially going to put even more people out of work.”
Glassman says that because the loss of the $600 payment will “disproportionately affect lower-income households, which have the highest propensity to spend,” it will have a commensurately greater impact on a consumer-dependent economy already short of consumers.
Although Congress is deep in negotiations over a potential extension of some benefits, accounts in the media and by lawmakers suggest Republicans and Democrats are still miles apart on the issue.
While Democrats want to see the full $600 extended for several more months, some Republicans favor a smaller weekly payment, such as $200, while others think any extra benefit creates a disincentive to return to work.
“The answer to these challenges will not simply be shoveling cash out of Washington,” Sen. Ted Cruz, R-Texas, said earlier this week, according to The Washington Post. “The answer to these challenges will be getting people back to work.”
Democratic lawmakers say the generous weekly payment was initially intended in part to keep workers from needing to seek work in the midst of a pandemic — a rationale they say has only grown stronger.
And with the virus continuing to slow the recovery, Democrats say, the $600 weekly payment would hardly be the main thing discouraging unemployed workers from looking for new jobs.
“We’ve lost millions and millions of jobs in this country,” said Rep. Derek Kilmer, D-Gig Harbor. “There’s far more job seekers than there are jobs.”
Despite the sharply diverging political rhetoric, congressional leaders and White House officials are still negotiating — and some lawmakers expect some sort of compromise in the relatively near future.
“The thing about negotiations … I’ve learned is that, often everything seems very far apart — until it’s not,” said Democratic Rep. Pramila Jayapal, of Washington, who argues that Republican opposition to a benefit extension may be faltering.
“There are a number of Republican senators who desperately need to get this [new package] done because their states are devastated,” Jayapal said. Democrats “may actually have more leverage than we might otherwise.”
In the meantime, unemployed workers are bracing for a future that could see fewer jobs and, at least, in the short-term, no extra $600 weekly benefit.
In fact, even Washington’s regular state benefit isn’t certain, given ongoing problems at the Employment Security Department.
From the start of the pandemic, the agency struggled to process the hundreds of thousands of jobless claims that resulted from massive layoffs.
It has also come under sharp criticism and even lawsuits over delays in payments to tens of thousands of workers.
On Thursday, the state Supreme Court rejected ESD Commissioner Suzi LeVine’s request to dismiss a lawsuit accusing her of failing to process claims in a timely fashion.
The agency is also dealing with the aftermath of a massive fraud. The scam, disclosed in May, siphoned off an estimated $550 million to $650 million in state and federal benefits and is still plaguing workers who are trying to file for benefits.
Among them is Riley. When the Vancouver paraeducator went to file her claim, she found one had already been filed by an impostor using her name. That means she must now join the queue of legitimate workers waiting to verified by ESD investigators.
The snafu only adds to Riley’s sense of uncertainty. Like many workers, she doesn’t know whether she will have a job this fall, or for how long, or if the job goes away, what she can expect in unemployment benefits.
She’s also conflicted about the whole benefits debate. She worries about the impacts a continued $600 payment would have on the nation’s debt. But she’s also uncertain how long it will take for jobs and wages to return on their own once the pandemic fully subsides.
“This is all so unprecedented,” she says. “We have never gone through something like this.”