While Justin Mackey worked to rebuild his locksmith business, the 38-year-old was relying on getting a $420-a-week unemployment check for another four months.
That money was a fraction of what he brought home before the pandemic shut down his business in Arkansas, but at least it kept his mortgage and other bills paid. And it allowed him to buy clothes and school supplies for his three young children: Camdyn, 14, Connor, 7, and Charlie, 3.
“It’s better than losing everything,” Mackey said.
But last week, Arkansas Gov. Asa Hutchinson said the state would be ending the federal unemployment programs early, including the $300 weekly boost. Those benefits will now expire at the end of June, more than two months earlier than Mackey had expected.
More from Personal Finance:
Workers could get 12 weeks of paid leave under Biden’s plan
Selling assets to avoid a higher capital gains tax? You may trigger another tax
The Fed keeps rates near zero — here’s how you can benefit
“Continuing these programs until the planned expiration date of Sept. 4, 2021, is not necessary and actually interferes with the ability of employers to fill over 40,000 job vacancies in Arkansas,” Hutchinson wrote in a letter. He joins Republican governors in Montana, South Carolina and Mississippi, who have also announced an early end to the aid, saying that it’s stopping people from taking jobs. Other states could follow.
As a result, many jobless people in these states will soon receive only their state benefit. The average weekly check is $248 in Arkansas; in Mississippi, it’s $195.
Rebecca Dixon, executive director of the National Employment Law Project, said leaving people with smaller benefits is shortsighted and dangerous.
“We’re going to see family hardship,” Dixon said. “We’re looking at a tsunami of debt, evictions and food insecurity on the horizon, and it’s mostly women and people of color who will bear the brunt of that.”
What’s more, because the federal programs expanded the pool of workers who are eligible for unemployment benefits, many self-employed, gig workers and freelancers will be entirely cut off from aid come July.
Mackey is one such worker.
His unemployment benefits have allowed him to keep his locksmith business, Jonesboro Lock & Key, running. He’s owned it for more than a decade.
But if that aid ends early, he might have to grab a job and abandon the shop. He said the wages on offer in his area were often unsustainable.
“I couldn’t afford to work in a fast-food place,” Mackey said. “I was making that money in high school.” (The minimum wage in Arkansas is $11.)
Before the public health crisis, he earned around $2,000 a week. He and his family lived comfortably.
And Mackey’s business is just starting to improve, he said, with more people calling of late.
“One of the reasons this pandemic unemployment is important for now is because it’s helping people with small businesses like myself try and build back,” he said.
The movement to end the federal unemployment programs took off after the April job’s report showed that the U.S. economy added 266,000 jobs, compared to the 1 million expected.
The U.S. Chamber of Commerce is among the voices calling on states to end the $300 federal boost, saying that “paying people not to work is dampening what should be a stronger jobs market.”
The lobbying group also estimates that 1 in 4 jobless individuals are earning more with unemployment than they were when working.
Yet cutting the aid will only make it harder for people to get back on their feet, said Megan Dishong, an attorney at Montana Legal Services Association.
Instead of looking for jobs, people will be worried about getting evicted and forced to spend their time applying for additional government assistance such as food stamps and rental aid, she said.
“People are in such a bind,” she said. “Ending the $300 benefit is only going to tie the knot tighter.”
If the goal is to get people back to work, she said, the focus needs to be on increasing wages and access to child care. (Among President Joe Biden’s proposals is a plan to make child care affordable or free for many families.)
“Until you have a safe, affordable place to send your kid, you just can’t go to work,” Dishong said.
People are in such a bind. Ending the $300 benefit is only going to tie the knot tighter.Megan Dishonglegal aid attorney
Meanwhile, some of the barriers to returning to work are unique to the pandemic, she said. Some of her clients, for example, are dealing with the long-term symptoms of Covid.
“They want to go back to work, but they’re still suffering,” she said.
As the number of states announcing an early end to unemployment benefits grows, Julianne O’Brien fears Florida will be next.
She was laid off at the start of the pandemic from her job as an estimator for a manufacturing company and was recently diagnosed with stage 2 breast cancer.
Without the federal aid, she would be left with just $275 a week. She lives around 40 minutes north of Palm Beach with her two children.
“People are saying we’re lazy and collecting unemployment,” O’Brien, 46, said. “I’m just trying to survive.”
Taking a job is not an option for her right now.
“My doctors say I should mostly stay home because my immune system is low,” she said. “Covid is still out there.”
Ashley Broshious said the $300 federal unemployment boost has been a lifeline for her during the pandemic, helping her to start a restaurant consulting and career coaching business.
In the past, she’s worked as a wine director and a general manager at different restaurants and earned more than $65,000. Those same positions are now offering $40,000, or less, an income that wouldn’t allow her to pay all her bills.
She’s been receiving jobless benefits since April 2020 when she was laid off from a restaurant in South Carolina, one of the states to announce an early end to the aid. (She recently stopped receiving her unemployment checks, but is working with a nonprofit lawyer to get them resumed.)
“There’s people like me who need that money to start something new, and if we lose it, all those plans end,” Broshious, 33, said.
It’s not just foiled plans that she fears.
“If these benefits get cut and I don’t win this case, I’ll lose my home,” she said. “I’m going to have to pack up my car and move in with my mom in her tiny house in Toledo, Ohio.”