What Occurs to the Unemployed When the Checks Run Out
Poverty, which actually declined in the early months of the pandemic – reflecting the extraordinary relief that the CARES Act offers in spring and early summer – has declined with a vengeance. According to estimates by Bruce D. Meyer of the University of Chicago, James X. Sullivan of the University of Notre Dame, and Jeehoon Han of Zhejiang University, 11.4 percent of Americans were living below the official poverty line by October, down from 9.3 Percent in June.
The checking accounts of the unemployed also reflect this reversal of wealth since the early stages of the CARES Act discharge, according to an analysis by researchers at the JPMorgan Chase Institute and the University of Chicago. Your account balance more than doubled from January to July, aided by the extra unemployment benefits and the economic impact review. Expressed as a percentage, their profit was much higher than that of employees who kept their jobs. Their spending increased too, peaking in July.
By late August, the last month the researchers tracked the unemployed ‘s finances, their median bank balances had shrunk by about a third since July, and lost most of the pillow that had built up since March.
“The typical family still has some cash buffer,” said Fiona Greig, co-president of the JPMorgan Chase Institute, “but it’s falling sharply.”
Regular unemployment insurance in the United States remains one of the least generous in the Organization for Economic Co-operation and Development. It usually drops to zero after six months, unless there are exceptional legal provisions. In Denmark or Portugal, on the other hand, unemployment benefits replace around two percent of lost wages by workers, even two years after they have lost their jobs.
In the US, according to the OECD, unemployment benefits make up around 20 percent of the average income of a family with two children. In Germany and Ireland they are over 50 percent.
Emergency laws like the CARES Act have given unemployed American workers a temporary boost in times of crisis. Unless Congress takes new action in the coming days, the safety net will revert to its previous state. Millions will fall through the cracks.