Unemployed Utahns lose $600-per-week stipend, as Congress debates new relief plan

He had a job as a front desk agent at Park City’s Deer Valley Resort until those frantic weeks in March when the specter of COVID-19 led to the shuttering of Utah’s tourism and hospitality sectors.

Eric Kokkola filed an application for unemployment benefits as soon as he was eligible. And like millions of Americans and tens of thousands of Utahns thrown out of work by the pandemic, the 29-year-old Cottonwood Heights resident has welcomed the $600 a week in federal relief that came on top of the standard state payment.

“It’s been a really helpful lifeline for me and my spouse,” Kokkola said. Though down to one income, they’ve paid rent on their two-bedroom apartment, kept up with other bills and even put aside some money.

His husband has a steady job with a nonprofit, Kokkola said, but recent months have still meant personal sacrifice to keep their budget afloat. The Utah native doesn’t like to imagine where they’d be without the extra help.

The stipend — created under the $2.2 trillion Coronavirus Aid, Relief, and Economic Security, or CARES Act — expired Saturday in all states except New York, where it expired Sunday. (While the law says it ends July 31, states will pay it only through the week ending July 25 or July 26, according to the U.S. Department of Labor.)

Congress is hotly debating a potential extension as part of a larger relief package, but a deal is not assured.

Lawmakers planned to phase out the $600 stipend and other pandemic relief, with the expectation that coronavirus infections would continue to decline. But with those cases now rising dramatically in as many as 40 states, including Utah, the prospect of losing the stipend has many unemployed people on edge as they balance a return to the workplace with worries about their health.

Kokkola is not so sure he wants a job similar to what he had in March.

“I am aware that I may not have a job for an extended period of time,” Kokkola said, “not only because they’re not available, but because I may not feel comfortable or safe going back to such a customer-facing position.”

Persistent unemployment

Utah’s jobless rate for June was at 5.1%, the second lowest in the country and almost half the national rate of 11.1%, the U.S. Bureau of Labor Statistics said.

Still, about 88,000 Utahns were filing ongoing unemployment claims as of last week, down from a peak of 126,190 residents in early May. New claims seem to have plateaued at a high level of around 5,000 per week for the past two months, reflecting the persistent economic disruption.

Kevin Burt, director of Utah’s unemployment insurance system, said several factors seem to be contributing to the high unemployment stats.

Some employers who furloughed workers aren’t seeing customer demand pick up quickly enough to merit bringing them all back, he said. And higher COVID-19 infections in Utah since Memorial Day may be dampening consumer confidence.

Workplaces that took early advantage of the federal Paycheck Protection Program loans shortly after they were approved in April to cover payrolls may now be running out of money, which could lead to additional job losses in the weeks to come.

Burt also said the “staying power” of the $600 stipend is a likely contributor in keeping claims at high levels. Some employers may be alternating staff between work shifts and furloughs to let them collect unemployment, he said, “in a scenario that maybe wouldn’t have worked without that rich benefit.”

For some unemployed workers — the state reports nearly 70% of those claiming unemployment say they are furloughed and have a job to go back to — the prospect of the $600 going away means they could see their benefit cut in half or more in one week. State benefits usually cover between 40% and 50% of lost income — while they last.

“Unemployment was never intended to take us through the length of this pandemic,” Burt said. “It’s supposed to be a stabilizer until businesses have adjusted, and now many businesses have made that adjustment, so you have to look for where those job opportunities are.”

Instead of opportunity, Alisha Hadden, a 32-year-old health care worker in South Jordan, sees real potential for hardship as the added benefit expires. The mother of two is caring for a 3-year-old son with respiratory problems and she fears she might expose him to COVID-19 if she goes back to her job as a phlebotomist.

“I can’t return to work,” said Hadden. Her mother, the only other wage earner in their home, faces a similar health worry as a schoolteacher, she said, and may be forced to take unpaid leave when classes resume this fall.

Hadden has 11 more weeks left of extended jobless benefits, paid for under a separate provision of the CARES Act. “Once that’s out,” she said, “we’ll have two adults and two kids, ages 3 and 5, and we’ll be bringing in $214 a week.”

Critics of the $600 benefit

Congress remains divided along party lines on the expanded unemployment benefits as the House and Senate negotiate a new pandemic relief bill. The latest GOP Senate proposal could preserve the stipend but adjust it to around $200 a week.

Republicans have argued the increased unemployment benefit has created a class of idled workers who would rather stay home and collect assistance than go back to work because the benefits pay better than minimum wage.

Rep. John Curtis, R-Utah, said he’s heard concerns from businesses in his district that are trying to reopen.

“I’m really surprised that there is a partisan divide on this extra $600 for unemployment,” Curtis said in an interview. “I know in my district, in my experience, that has been a real impediment to a recovery.”

Senate Democratic leader Chuck Schumer of New York has pushed back on the cut to benefits in the GOP package, arguing Republicans are putting businesses before lives.

“That’s right, America,” he said. “If you’ve lost your job through no fault of your own, and can’t go back to work because this administration has mismanaged the crisis, Republicans want you to take a pay cut in the middle of this crisis.”

The $600 stipend isn’t the only relief program that is expiring.

On Friday, a moratorium on evictions of residents living in federally insured apartment complexes ended. Early August will bring a cutoff for businesses to apply for those forgivable Paycheck Protection loans. Payroll support for passenger air carriers such Delta Air Lines — a major Utah employer — is supposed to go away in September, as is a freeze on more than $42 billion in deferred student loan payments.

A national expert on unemployment said the canceling of the $600 stipend now was “fast hurtling the U.S. toward an economic and humanitarian cliff.”

“Nothing in the rate of decline in ongoing claims should give policymakers the impression that the $600 supplement is no longer needed,” said Andrew Stettner with The Century Foundation, a think tank based in New York City.

What happens next?

The Utah Department of Workforce Services has paid out more than $1.1 billion in total unemployment assistance since mid-March — a historic number that far exceeds amounts spent on jobless aid during the Great Recession.

Of that, nearly $730.8 million has flowed to out-of-work residents through the $600 stipend.

James Wood, economist and senior fellow at the University of Utah’s Kem C. Gardner Policy Institute, said while that seems like a gigantic number, the four-month cash infusion represents somewhere around 1% of Utah’s estimated total nonfarming wages for 2020.

“For those families receiving the stipend, it’s critical,” Wood said. “But in terms of what it does for the economy, it doesn’t change our path that much.”

Weeks ago, state officials began warning jobless residents the federal stipend may soon evaporate, nudging them to learn new job skills and seek work in other industries if necessary. Workforce Services held virtual job fairs in April and June to highlight more than 26,000 openings listed on jobs.utah.gov.

Burt said the state has been preparing to direct people in need to other forms of government aid such as food stamps, Medicaid and a new $20 million fund for rental assistance.

Half that rental assistance fund is being kept in reserve, according to Wood, “just in case things do blow up after the expiration of the $600.”

The Utah Legislature, meanwhile, has pumped $9 million in federal dollars into what the state is calling “Live & Work in Utah.” That will pay for short-term worker training and certificate programs at Utah’s colleges and universities to teach sidelined workers skills more in demand among the state’s major employers.

Tiffany Young is a 49-year-old corporate trainer based in Salt Lake City who worked as an independent contractor — until the pandemic shut down air travel and large meetings, leaving her on an ever-lengthening furlough.

Young, who also rescues birds, qualified for a CARES Act program that for the first time has paid unemployment for contractors, the self-employed and other gig workers — and that’s given her some breathing room.

The benefits, she said, “have been lifesaving” while she’s also been caring for her medically frail parents, ages 75 and 80, since March.

Unsure her old job will ever return, Young said she may instead become a grade-school math tutor for disadvantaged students as they learn online. She’s got some financial cushion, though it might not last long enough.

“I will not, you know, lose my house this year,” Young said. “But I guess if this goes on beyond December, then I’m going to be in trouble.”

Senate Republicans are expected to release their plan Monday, and it is possible that Congress will vote on a new relief package as soon as the end of the week.