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Why Millions Of Californians Are About To Lose Their Unemployment Benefits

A closeup of the Coronavirus Aid, Relief, and Economic Security Act document with a pair of reading glasses resting on top.
Federal unemployment programs are set to expire this month.
(hapabapa
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Getty Images/iStockphoto)
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Federal unemployment benefits have been a lifeline for Angelenos who lost work during the pandemic.

Now, those benefits are going away. Millions of Californians will lose payments when federal programs come to an abrupt end later this week.

Workers facing the cut-off say they’re struggling to find jobs. And legal aid providers say they’re preparing to help many unemployed Angelenos facing eviction because they can’t pay rent.

“This will result in more people being pushed into homelessness,” said Citlalli Ochoa, an employment law staff attorney with Neighborhood Legal Services of L.A. County.

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Two key dates are in play:

  • A slate of federal unemployment programs end on Sept. 4
  • California’s eviction moratorium is scheduled to end shortly after that, on Sept. 30.

Ochoa said she’s already seen some of her clients fall into homelessness after losing unemployment benefits. She predicts that story will become more common in months to come.

“We are preparing to see a lot more people who have lost [unemployment] benefits and who have lost housing as a result of that,” Ochoa said.

Who Is Facing The Sudden Cut-Off?

The vast majority of jobless Angelenos now are receiving benefits through various federal programs created during the pandemic — not typical state unemployment claims. Those programs were never intended to be permanent and are all slated to end this month. Congress seems unlikely to renew them.

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California’s Employment Development Department (EDD) hasn’t said how many people will lose benefits. But The Century Foundation, a progressive think tank, predicts more than 2 million Californians will be affected.

Those facing the looming cut-off fall into two main groups:

Gig Workers, Freelancers And The Self-Employed

In one group are the gig workers, freelancers and self-employed workers who normally don’t qualify for unemployment insurance. They’ve been receiving benefits through the federal Pandemic Unemployment Assistance (PUA) program. Those payments will end on Sept. 4, regardless of how long workers have been on the program.

Self-employed workers who were shortchanged due to a flaw in the unemployment system will also lose a supplemental $100 weekly benefit provided through the Mixed Earner Unemployment Compensation (MEUC) program.

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The Long-Term Unemployed

Another group is made up of the long-term unemployed — those who lost jobs early in the pandemic and haven’t found work yet.

Many are getting benefits through the Pandemic Emergency Unemployment Compensation (PEUC) program, which provides an extension to state unemployment claims that typically last only 26 weeks. Others are on a different extension program called Federal-State Extended Duration (FED-ED). That program ends on Sept. 11.

Workers who are on a normal state Unemployment Insurance (UI) claim will continue to receive state benefits. But those workers will still feel the impact of the federal cut-off, because they will lose a $300 weekly boost currently provided to all unemployment recipients through the Federal Pandemic Unemployment Compensation (FPUC) program.

Millennium Biltmore hotel Downtown Los Angeles
The lobby of the Millennium Biltmore hotel in Downtown Los Angeles.
( P G Roy Photography / Flickr (https://www.flickr.com/photos/88834196@N00/))

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With Hotel Rooms Empty, Hospitality Workers Are Sidelined

It didn’t take long for the pandemic to claim Christine Chan’s job. She was working at the Millennium Biltmore hotel in downtown L.A. when the county issued its first stay-at-home order.

“They announced it on March 16, and I got laid off a week later,” Chan said.

Hotel employment still hasn’t fully recovered. Payrolls for the state’s leisure and hospitality industry remain more than 20% below pre-pandemic employment levels. Travel remains low, and hotels don’t need the same number of workers.

“I've been looking so hard,” Chan said. “Hospitality jobs are not really strong in hiring.”

Chan said in the past few months, she had applied to more than 20 jobs. She even landed a couple interviews. But so far, no job offers. A mother of two teens, Chan needs to find work soon because her $750 in weekly unemployment benefits will be gone after Sept. 4. Chan’s husband, an Uber driver, will lose his benefits too.

She said, “I am actually freaking out. I want to be a strong person. I'm trying to. I don’t want to show my weakness to my kids.”

Chan said her family has saved enough to last a few months. After that, she’s not sure how they’ll buy groceries or pay rent.

“Hopefully by then I can get a job,” she said. “That’s all I can hope for.”

The Delta Variant Is Holding Back L.A.’s Economy

Earlier this year, with vaccines becoming widely available and COVID cases going down, there was hope that businesses would soon get back to normal.

But now, with the delta variant spreading, employers are sticking with reduced staff. In-person workers remain worried about getting sick — even those who are fully vaccinated.

Ochoa said some workers they’ve talked to at Neighborhood Legal Services are afraid of getting COVID-19 and bringing it back to their family.

“There can be grandparents in the home. There can be multiple families in the home,” Ochoa said. “It's not always safe to return in-person to a work environment.”

And she said unemployment benefits aren’t sapping people’s motivation to look for work. For some, childcare needs or personal health conditions make it tough to return to the workplace.

L.A.’s Unemployment Rate Is Still In Double Digits

L.A. County’s unemployment rate has greatly improved since the first few months of the pandemic. But it remains high at 10.4%, according to the state’s latest jobs report.

UCLA economist Till von Wachter said research has shown that cutting benefits doesn’t push people to find a new job when those jobs simply aren’t available.

“We have seen a lot of economic progress over the summer,” he said. “But certainly in some of the lower wage sectors, we have not recovered all the jobs that we have lost.”

Unemployment relief recipients won’t be the only ones affected by the cut-off, said von Wachter. Those benefits have played a huge role in propping up the state’s economy, giving millions of Californians money to spend on rent, food and other goods and services.

With that stimulus money about to vanish, von Wachter said the broader economy will suffer.

“Individuals are more likely to slip into poverty and have big reductions in consumption,” he said. “We really need all hands on deck to think of ways of supporting these workers.”

Officials Are Trying To Connect Unemployment Recipients With State Aid

EDD officials said they are encouraging those on unemployment to apply for various state programs providing food assistance (CalFresh), rent relief (through the state’s HousingIsKey website) and low-cost health insurance (Covered California).

But legal aid advocates say applying for all those different services could be a challenge for many jobless Angelenos, and they may not qualify for each program.

For workers like Christine Chan, nothing will fully make up for the loss of direct weekly unemployment benefits.

“I save as much as possible,” she said, “because I do not know what my future is going to be like.”

For now, Chan plans to keep applying for jobs, and keep hoping hotels start to fill up again.

What questions do you have about business and the economy in Southern California?
David Wagner focuses on Southern Californians getting left behind in an economy beset by soaring unemployment, pandemic-related business closures and high housing costs.