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How The COVID “Benefits Cliff” Impacts Workers

December 16, 2020
min read
Michael Vaynerman
Crew Members

The end of 2020 is near, and while many are excited to be done with the year that brought so much uncertainty and pain, there are a few things ending this year that many won’t want to see go.

At the start of the COVID-19 pandemic, Congress passed the CARES Act, which provided emergency relief and assistance to American workers and businesses. This included some high-profile help, like stimulus checks and an extra $600 on all unemployment checks. But there were also a variety of other programs - like unemployment assistance extensions, eviction moratoriums, and protections for student loan borrowers - that were designed to help the growing number of unemployed workers make ends meet.

Several of those programs are scheduled to end before the start of 2021. The end of multiple programs happening at once has come to be known as a “benefits cliff,” where many Americans will fall off the edge - stop receiving benefits - at the same time.

This includes two primary programs that are helping gig and hourly workers who are trying to get back on their feet:

Pandemic Unemployment Assistance (PUA)

The PUA program directly benefits independent contractors, including gig workers, who aren’t traditionally able to collect unemployment benefits. As 1099 contractors, they don’t pay into state unemployment funds and therefore can’t collect benefits when unemployed. Through PUA, they are eligible for up to 39 weeks of benefits.

When does this end? December 26, 2020.

Pandemic Emergency Unemployment Compensation (PEUC)

The PEUC program extends unemployment benefits by up to 13 weeks once individuals have exhausted their regular unemployment benefits. This is critical for those who were already unemployed before shelter-in-place orders began and are struggling to find work in the now much more competitive job market. 

When does this end? December 26, 2020.

How will this impact workers?

Some estimate that 12 million people will lose their unemployment benefits at the end of this month, combining the impact of these two programs. An estimated 7.3 million of those are due to the end of the PUA program that was working to help gig workers and other independent contractors.

The true impact of loss on this scale is difficult to predict. It will cut the income of millions of American families, and while some will be able to absorb the loss, others will not. This is a huge concern for gig workers, many of which already battle with financial insecurity.

What comes next?

Congress is currently working on a safety net for those about to fall off the COVID benefits cliff. There have been a variety of proposals in the past, but a new bipartisan bill proposed on Monday, December 14, could soon receive a vote. It includes enhanced unemployment benefits and would extend both the PUA program and PEUC program for another four months. 

There also remains concern that all of this is coming too late, as experts predict that there will be a lapse in benefits even if Congress passes a new bill soon. Even if the lapse is short, it will be difficult for those who live check-to-check to pay bills while they wait.

Our prediction is that it will rapidly accelerate the competition in the job market. Workers are tired of unemployment - of waiting for government support - of hoping that something will pass at the last minute to help them. Everyone wants to control their own destiny, and that’s hard to do when you’re unsure if you’ll be able to pay your bills.

To those looking for work: we’re here to help in any way we can. We know that uncertainty and waiting can be difficult. If you’re looking to pick up shifts, we have a variety of opportunities across all experience levels. You can sign up here or download the Bluecrew app in the App Store or Google Play Store.

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