CHICAGO For 39 years, Joseph Aleman spent baseball season hawking beer at Wrigley Field, trekking through the stands with 25 pounds of cold brews strapped to his back.
He loved the job, and was good at it, typically earning $1,000 to $1,500 a week in commission and tips during the lucrative summer months. Combined with off-season work as an extra on TV shows shot in Chicago, Aleman, 62, made a decent living for himself and his 19-year-old daughter, who has autism and lives with him in their suburban home.
The COVID-19 pandemic stripped Aleman of both jobs as sporting events and TV productions came to an abrupt halt in mid-March. More than four months later, Aleman doesn’t know when the work might resume.
A saving grace has been unemployment insurance, which has allowed him to pay his mortgage and bills and occasionally splurge on takeout pizza. But he and millions of other people laid off as a result of the pandemic could soon see severe cuts to those benefits.
The extra $600 weekly in federal unemployment benefits that people have received during the pandemic is set to expire this weekend. After that, the jobless will be eligible only for regular state unemployment aid, which in Illinois pays 47% of a person’s regular wages, up to a maximum of $484 a week.
For the millions who remain out of work, including many in industries that were decimated by stay-at-home mandates and won’t get back to normal for some time, the scenario is devastating. Economists warn that letting the supplement expire could make it difficult for people to buy food and pay bills, dealing a blow to the overall economy.
Lawmakers are debating the future of such supplements as the economic impact of the pandemic drags on. While the unemployment rate has declined from its April peak, in June it was still at 11.1% nationally and 14.6% in Illinois, where more than 946,000 people were out of work. Last week, an additional 38,000 people in Illinois applied for jobless benefits.
House Democrats in May approved legislation that would extend the $600 in extra weekly benefits through Jan. 31 as part of a sweeping $3 trillion stimulus package. Senate Republicans this week introduced a $1 trillion counterproposal that would replace the $600 supplement with a lower amount, because of concerns that some people have been receiving more in unemployment aid than they were through their regular paycheck. They are also reportedly in talks with the White House about proposing a short-term extension of the enhanced unemployment benefits..
Aleman has been upset by the back and forth as the clock ticks. For him, the loss of the supplement would mean he gets $219 per week in unemployment benefits instead of $819, which isn’t enough to make ends meet and may force him to sell belongings or dip into savings meant for his daughter.
“I think it’s a slap in the face,” Aleman said. “There is a lot of people in this country that don’t know when they’re going to work again.”
The enhanced unemployment benefits, part of the $2.2 trillion relief package passed by Congress in late March, were intended to replace the full wages of people who lost their jobs as governments mandated business closures and urged people to stay home to slow the spread of the coronavirus. Congress agreed to a flat weekly $600 payment on top of state benefits because old computer systems at state offices couldn’t handle calculating individual replacement pay. It also extended eligibility to independent contractors, gig workers and the self-employed.
The money has helped prop up the economy. While spending among employed people fell 10% during the pandemic, it increased 10% among those receiving unemployment benefits, according to an analysis by University of Chicago economists. Without the $600 supplement, the authors concluded, there could be a huge drop in overall consumption.
But the supplement has been controversial because, for low-income people, the extra $600 puts them above their regular wages. Two-thirds of unemployed people can receive more in government benefits than they earn while working because of the supplement, and one in five can get twice as much in aid as their usual paycheck, according to another University of Chicago analysis.
That’s raised concerns that people won’t want to return to work as businesses reopen.
“If that means the labor market won’t work as efficiently because these people won’t have incentive to go back to work, that hurts the economy in the short and long run,” said Michael Miller, associate professor of economics at DePaul University. “What can we give them to protect and help them but at the same time not provide so much assistance that they make a decision that is a detriment to the economy?”
Many economists agree that eliminating the federal supplement entirely would be disastrous given that 30 million Americans, or one in five workers, are currently receiving unemployment benefits.
With many state eviction moratoriums also set to expire at the end of this month, there could be a massive homelessness problem if people can’t pay rent, said Ben Harris, executive director of the Kellogg Public-Private Initiative at Northwestern University’s Kellogg School of Management. Illinois Gov. J.B. Pritzker announced Wednesday that the state’s eviction moratorium would be extended through August 22.
“We are really on the cusp of a Great Depression-like situation,” Harris said.
Laid off workers say the extra $600 in weekly benefits has been critical to maintaining some normalcy while their jobs remain unavailable.
“It has allowed me to stay in my apartment and not have to move in with my mother,” said Paula Blyth, 54, who usually makes about $46,000 a year feeding cast and crew on the sets of TV commercials.
Blyth has been getting $900 weekly in unemployment benefits, on par with her regular wage, which she said has allowed her to “live without fear.” But the benefits would drop to $300 a week if the supplement expires.
“I have always been a happy person and very optimistic,” said Blythe, who lives on Chicago’s north side. “Now I wake up with a knot in my stomach. I have a hard time sleeping. I think about what I can do to supplement my income. I’m not really skilled to do anything else.”
Andres Moreno is making slightly less on unemployment than he was working full time as a server at the downtown restaurant Fisk & Co, but it has been enough to pay rent on his Avondale apartment and occasionally buy takeout from neighborhood restaurants and knick-knacks from local shops. Without the supplement, his weekly benefit would drop to $300 and he couldn’t afford to support those businesses, he said.
The enhanced benefits are also helpful as he looks to buy health insurance, since he lost his employer-provided benefits.
Moreno, 35, thought about getting another job, but safety concerns held him back.
Though he was recently told his temporary layoff is now considered indefinite, he is hopeful he will be called back to work at the restaurant, where he got full benefits and a 401(k).
“I’d much rather have a secure job than the extra $600,” Moreno said.
Concerns that people would rather be idle than working aren’t based in reality, said Jeremy Rosen, director of economic justice at the Shriver Center on Poverty Law. People want safe and stable work the problem is the dearth of stable jobs and safe workplaces, he said.
Manuela Sepulveda, 50, who lost her job as a home health aide in April, is earning more on unemployment than she was working, but she misses the work and wants to return to her field. The challenge is that she isn’t quite ready as she deals with depression after one of her clients died of COVID-19. She was asymptomatic when she tested positive for the virus and immediately went home, but worries she may have gotten him sick.
“This affected me a lot,” she said in Spanish. “It was hard because part of me felt like I was to blame.”
Melissa Kearney, director of the Aspen Institute’s Economic Strategy Group, is part of a group of prominent economists that has proposed an alternative to the $600 supplement. Their proposal calls for calculating a federal supplement based on a percentage of the recipient’s wages, and it would phase out as the economy improves.
For example, when unemployment is high people would receive an extra 40% of their wages on top of their state benefits so in Illinois they’d get nearly 90% of their usual paycheck and that percentage would decline as the state unemployment rate falls.
The government should also reward work, Kearney said. While some Republicans have proposed offering hiring incentives to pull people out of unemployment, she proposes doubling the earned income tax credit for the year to boost the wages of lower-wage workers who never stopped working through the pandemic.
“There is a bit of an inequity in that we have subsidized unemployment insurance so that people out of work are getting more generous pay than their counterparts who had to work this entire time,” Kearney said.
To Michael Wenz, associate professor of economics at Northeastern Illinois University, nailing the perfect formula is not the priority.
As the health crisis continues, the biggest threat to the economy is weak consumer demand for certain goods and services that is keeping employees in hard-hit industries like travel and hospitality unemployed.
“Until spending recovers, worrying about whether we’re sending $400 versus $600 is looking at the wrong problem,” Wenz said. “Right now the real concern has to be that people keep a roof over their heads.”
Roushaunda Williams, who worked for 19 years as a bartender at the Palmer House Hilton before she was laid off in March, said her unemployment insurance is enough to cover her rent but not much else. She used to make, on average, $1,500 weekly bartending, and now gets, after taxes, just over $900 a week in aid.
Williams, 52, said she has depleted her savings to pay bills and is running out of costs to cut. She stopped running her air conditioner, traded her pricey skin cream for a $5 drug store version and cut back on visits to the hair salon.
If she loses the extra $600, she expects she will lose her Uptown apartment and have to move in with friends.
The sharp drop in benefits might force some people to look for other work rather than wait for their jobs to come back. But Williams, who is applying to be a Census worker, isn’t willing to take just any job after fighting hard for years for a good wage.
“To go backwards and be under the poverty line is just not something I want to do,” said Williams, a steward with her union, Unite Here Local 1, which represents the area’s hotel workers.
Aleman, the Wrigley Field beer vendor, bristles at the notion of finding another job when he had one he loved.
“Are they going to put me in a chicken place where I’m plucking chickens?” he said. “Or will they put me at Jewel stocking on the midnight shift? I’m not going to go anywhere with that.”
As the expiration of the extra unemployment benefits nears, Aleman has faith that those in power won’t cut off the lifeline keeping many people like him afloat.
“You’re dealing with the benevolence of other people,” he said. “And I hope, and I pray, that they come up with the compassion.”
