With Federal Unemployment Boost Ending, Some Freelancers Wonder If They Have A Future In LA
Early in the coronavirus pandemic, Congress passed a stimulus package that gave an extra $600 per week to everyone on unemployment.
That money has been crucial to making ends meet for many out-of-work Californians, especially L.A. freelancers who've seen their work dry up.
But that federal unemployment boost is slated to go away at the end of July. And so far, it hasn't been renewed. That has some creative freelancers in L.A. wondering if they have a future here.
'THIS MONEY HAS KEPT PEOPLE ALIVE'
An estimated 430,000 people in L.A. work as freelancers. That includes rideshare drivers, graphic designers and entertainment industry workers.
DON'T MISS ANY L.A. CORONAVIRUS NEWS
Get our daily newsletters for the latest on COVID-19 and other top local headlines.
One thing many of them now have in common: They're unemployed, and that weekly $600 has been keeping them afloat.
"This money has kept people alive," said UC Riverside economics professor Gloria Gonzalez-Rivera. "This is money that is used to pay the rent, or to pay the mortgage, to pay utilities. It's spent on basic needs.
Michelle Faucheux produces commercials for a living. But shoots have been canceled because of the coronavirus, and some clients say they won't start again until next year.
She said in this industry, it's not unusual to go a few months without a paycheck.
"But what you're not planning for is being in a situation where you're not working for six months, or maybe a year," Faucheux said. "There's just no way to plan for that."
Faucheux has been using her unemployment benefits to pay rent on the Silver Lake apartment she shares with her boyfriend.
"Once the $600 goes away, I have no idea what we're going to do," she said.
HOW SOME FREELANCERS GET SHORTCHANGED BY UNEMPLOYMENT
Take away the federal $600 boost, and Faucheux receives just $187 per week in benefits from California's unemployment office, much lower than the state maximum of $450 per week.
That's because, like many freelancers, her benefits were calculated on just a tiny fraction of her overall income. She's mainly paid as a 1099 contractor. But she got paid as a W-2 employee for one brief job in 2018.
Any amount of W-2 income will supersede all 1099 income when the state determines unemployment benefits. As a result, the state disregarded the vast majority of Faucheux's income when calculating her benefits.
Faucheux said on its own, that $187 wouldn't go far.
"Probably groceries, gas and incidentals," she said. "It would cover my health insurance if we didn't eat."
Some freelancers have given up on unemployment benefits completely, seeking out different forms of financial help.
Photo assistant Kyle Petrozza applied for a Paycheck Protection Program (PPP) loan to cover his lost salary for the near future. He said it's preferable to dealing with the unemployment system, but the loan could also run out before work picks up again.
"I think I can get by for another two to three months at the most," Petrozza said. "Then we're back to square one, with basically no work and no benefits."
Some self-employed freelancers don't realize they're eligible for these loans, or they've struggled to access them.
For now, any amount of state unemployment benefits entitles recipients like Faucheux to the additional federal $600 per week. But even that doesn't cover everything.
"I've actually even considered giving up my health insurance because it's so expensive," she said. "And then I'm like, 'Well, you can't give up your health insurance in the middle of a global pandemic.'"
CONSIDERING AN L.A. EXODUS
These decisions are getting even harder now that the $600 dollars is scheduled to sunset at the end of July. Faucheux said if it's not renewed, she'll probably have to give up her L.A. apartment and move.
Should it come to that, her plan is to move back home to New Orleans. The cost of living is much cheaper, and she thinks she could still find work shooting commercials there. But it wouldn't be easy leaving behind the life she's built in L.A.
"I'd be heartbroken. I love California," she said. "It would feel a bit like I've regressed back to the 23-year-old that moved to Los Angeles as opposed to the 45-year-old who's been working in the industry here for 20 years."
That outcome wouldn't just be hard on freelancers like Faucheux. It could also upend California's economy, which now relies on these payments.
"I refer to our current situation, at least in significant part, as an unemployment insurance economy," said Michael Bernick, an employment lawyer and former director of the state department that runs California's unemployment office.
BENEFITS COULD BE EXTENDED SOON
Benefits in California have totaled more than $41 billion so far, with most of that coming from the federal stimulus. Bernick said those $600 have played a huge role in keeping the state's economy from crumbling.
"It is harrowing to think what might happen if some alternative is not enacted," he said. "I think some will be."
Bernick said Congress will likely extend the additional benefits, perhaps at a lower level. Lawmakers are also considering offering a bonus for people who go back to work.
Meanwhile, the uncertainty is taxing for freelancers like Michelle Faucheux. She wants to know whether or not she can afford to stay in L.A.
"I would say within the next two months, we would have to decide," she said.
Without a deal to extend benefits during this pandemic, that decision could be made for her.