Over 300,000 Americans Lost Jobless Benefits Prematurely During the Pandemic

by Maurie Backman | Updated July 25, 2021 - First published on April 24, 2021

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Jobless benefits were supposed to be a lifeline for the unemployed. But some people were cut off early.

When the coronavirus outbreak first exploded, millions were forced to deal with income loss as the unemployment rate skyrocketed to 14.7% in April of 2020. Fast forward a year, and the jobless rate is now at 6.2%. That is a vast improvement, but it's still much higher than what it was in February of 2020, when the jobless rate sat at 3.5%.

In fact, a large number of people who lost their jobs early on in the pandemic are still unemployed. And as such, they may be relying on jobless benefits to pay their bills, especially since many have, at this point, completely exhausted their savings.

There's just one problem -- many people have seen their unemployment aid cut off early.

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Jobless workers are losing their benefits

It's estimated that nearly 315,000 people lost unemployment benefits early during the pandemic, according to a study by the California Policy Lab. And the reason largely boils down to faulty reporting and outdated state unemployment systems.

Unemployment benefits are paid at the state level, and each state has its own process for determining eligibility. Meanwhile, states generally pay up to 26 weeks of unemployment benefits during normal times. During periods of economic crisis, however, extended benefit programs generally kick in. This should have been the case during the coronavirus pandemic. In fact, these state systems are generally able to pay those extended benefits automatically during periods when the jobless rate is high.

But faulty design has caused 33 states to end their extended benefits programs starting in the fall of 2020, even though the jobless rate has remained high. The result? More than 300,000 people lost benefits early.

Generally, states offer extended jobless benefits once the insured unemployment rate exceeds 5%. That rate represents the number of people actually collecting unemployment benefits. But that rate only accounts for people receiving regular state unemployment benefits. It does not account for workers who are getting jobless aid via federal programs, such as those created by the CARES Act, the massive relief bill signed in March of 2020.

As such, in many states, the insured unemployment rate has dropped below 5%, thereby ending those states' extended benefits programs. In fact, as of late March, just 16 states were still paying extended benefits, according to the U.S. Department of Labor.

The good news is that jobless workers have been able to receive benefits through the temporary federal unemployment programs the recently signed American Rescue Plan extended through early September. But some jobless workers have no doubt fallen into the gap of seeing their state benefits end without being bumped into a federal program.

If you've seen your jobless benefits end prematurely and you're still out of work, contact your state's labor department to find out what you need to do to resume your benefits. The federal unemployment programs are still paid through individual states, so you'll need to go through that channel to look into getting your benefits reinstated if you're still eligible.

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