Millions may soon face lower unemployment benefits or lose them altogether

  • The long-term jobless who applied for benefits a year or more ago might requalify for state unemployment insurance once federal benefits run out Sept. 6.
  • These workers have reached the end of their "benefit year." The state will assess a worker's recent earnings to determine if someone is eligible for another round of assistance.
  • Someone who worked only alittle during the pandemic may not qualify for much, if any, based on state formulas.

Millions of Americans are poised to lose their unemployment benefits or see a lower weekly payment due to a collision of state rules and the expiration of federal programs.

Such workers are reaching the end of their "benefit year," which marks a year since they applied for assistance.

Seeking aid past this point typically triggers a review from state labor agencies. They assess a worker's recent earnings record to judge whether the person qualifies for a new installment of benefits — and, if so, the appropriate amount.

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However, recipients who haven't found a job or have worked few hours since the start of the pandemic may be out of luck. Little earnings will likely mean a much lower — if any — benefit.

Until now, a federal program — Pandemic Emergency Unemployment Compensation — has largely kept income support intact for these long-term unemployed, even if their "benefit year" elapsed.

But that program ends nationwide after Labor Day. Around two dozen states, mostly Republican-led, ended it early.

Roughly 4.7 million people — a third of all recipients — were collecting benefits through the program as of June 26, according to Labor Department data.

It's unclear how many of them first applied for benefits more than a year ago. But another data set, from the Bureau of Labor Statistics, suggests 2.9 million Americans have been out of work for more than a year, though not all necessarily collect jobless benefits.

"Maybe there could be several hundred thousand, maybe 1 million at the high end [who'd qualify for benefits again]," said Andrew Stettner, a senior fellow and unemployment expert at The Century Foundation, a progressive think tank.

"And for everyone else, they'll have to scramble to find a job, go on food stamps, use their savings," he added. "Rental assistance should still be available, but they won't have cash income, really."

(This benefit-year issue applies to those eligible to collect state unemployment insurance. About 5.7 million self-employed, gig, freelance and other workers who are ineligible for state benefits are collecting federal aid through the Pandemic Unemployment Assistance program, which also ends Sept. 6.)

The Pandemic Emergency Unemployment Compensation program has been available to workers since the beginning of the pandemic.

Created by the CARES Act, it offers aid to those who exhaust their allotment of standard state benefits — generally up to 26 weeks but sometimes much less, depending on the state.

Congress has twice extended the program's duration via Covid relief measures passed in December and March. The most recent, the American Rescue Plan, extended it to Sept. 6.

Twenty-two states opted to end federal unemployment assistance — including aid for the long-term unemployed — in June or July. (Another four opted for an early end to a $300 weekly supplement to benefits.)

State officials claimed the extra benefits were causing recipients to stay home instead of look for jobs. Critics of that stance say other factors, like ongoing health risks and child-care duties, played a bigger role in any perceived labor shortages.

Meanwhile, an upswing in U.S. Covid cases from the delta variant, largely among the unvaccinated, may negatively impact local economies and potentially lead workers to turn to the unemployment system again.

States use different formulas to determine how workers can re-qualify for assistance once their benefit year has elapsed. All of them require at least some recent work history to be eligible, though to varying degrees.

"That new benefit year will be based on earnings throughout the pandemic," said Michele Evermore, a senior policy advisor for unemployment insurance at the U.S. Labor Department's Employment and Training Administration. "And [payments] may be significantly less than they were getting before, if they're eligible at all."

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