The Cares Act was a gamble that the coronavirus would be eliminated quickly. That was a bad bet, and Americans are set to pay the price for it once again.
Unless lawmakers pass a new relief measure soon, millions of workers will stop getting jobless benefits in just five weeks when pandemic-era emergency programs expire. The pain won’t be limited to the unemployed, but will reverberate across the economy, hitting everything from consumer spending to businesses’ profitability.
The basic problem is that America’s unemployment insurance system isn’t designed to deal with economic downturns—and the programs created in the Cares Act weren’t designed to last long enough to deal with a world where the virus is surging, growth is slowing, and wide distribution of a vaccine is still months away.
States and territories offer only 12 to 26 weeks of benefits, with the possibility of up to 20 additional weeks when the local jobless rate is high. That’s plenty of time to find a new job—or move to a new city—when the national economy is doing well. But it often takes years before a decent job market returns after a downturn hits. That’s why Congress created programs during recessions in 1982-85, in 1991-94, in 2002-04, and in 2008-13 to provide extended benefits for people who couldn’t find jobs through no fault of their own.
There’s no indication the rebound this time will be much faster. Despite expressing optimism about the rapidity of the recovery going into next year, Goldman Sachs analysts nevertheless expect that America will only “reach full employment by 2024.” While many of those who lost work in March and April have since been rehired, millions of others haven’t, at least not into stable employment.