In the ultimate act of unfortunate timing, the pandemic-era unemployment benefits for some 7.5 million people will run out on or just before Labor Day, the federal holiday that honors the contributions of American workers.
The largest such cutoff in history, affecting more than 300,000 in Massachusetts, is taking place as the coronavirus pandemic that caused unprecedented job losses escalates once again, casting a shadow over a still shaky employment landscape.
Employers grappling with staffing shortages have been watching the date with great anticipation, hoping the loss of weekly checks will spur people back into the job market. Congress, which has extended jobless benefits several times, is not expected to do so again.
The looming cutoff of benefits reveals a Massachusetts economy that, now more than ever, is a picture of extremes between the haves and the have nots, one that breaks along racial lines and keeps low-wage workers from moving up the ladder. The pandemic has sharpened people’s desire to improve their lives by moving away from dead-end jobs, but longstanding barriers are once again holding low-wage workers back, just as they are about to lose the only safety net they have.
A great number of those on the sidelines work in still-struggling service sectors, including hotels with empty rooms, and restaurants and cleaning firms that cater to office employees still working from home. Closures of day care centers have made it difficult for parents to work, as has the increased use of technology for virtual job fairs and online applications, especially for immigrants with limited English skills.
Moreover, the pandemic has prompted some unemployed workers to reconsider returning to low-paid, public-facing service jobs that could put their families at risk as the highly contagious Delta variant rages. Some of those jobs pay just enough for them to lose their MassHealth medical benefits, but not enough to live on.
“Reopening the bottom part of this economy is hell,” said John Drew, chief executive of Action for Boston Community Development, an antipoverty agency that itself cannot find enough child care workers to staff all of its Head Start classrooms. For those on unemployment who have used the time and benefits to pursue a new career, Drew said, the mind-set seems to be: “Maybe I can do better than going back to that lousy job I had.”
The vast majority of the nation’s unemployed people will lose their supplemental income from three temporary federal programs that, in Massachusetts, expire Sept. 4: extended benefits for the long-term unemployed, special aid for gig-economy workers, and a $300 weekly supplement.
A great number of those affected in Massachusetts will be people of color, who have already suffered disproportionately during the pandemic; the unemployment rate in the state over the past 12 months for whites is 6.3 percent, but 9.8 percent for Black people, and 11.8 percent for Latinos.
Such high rates for people of color would be considered a “national emergency” if they applied to the entire population, according to Andrew Stettner, a senior fellow at The Century Foundation who has been closely studying unemployment.
When the pandemic hit, Kamal Elkarfa had been driving for Uber and installing surveillance cameras. With a baby at home in Everett born with respiratory issues, Elkarfa felt he had no choice but to stop working. Aided by unemployment checks, along with free child care and grocery money from the federal nutrition program, SNAP, Elkarfa and his wife, Zainab Hmito, started taking online classes at Bunker Hill Community College — Elkarfa pursuing a certificate in Web development and Hmito taking prerequisite courses for a nursing degree.
The couple, who are from Morocco, have been looking for jobs to make up for the $600-a-week loss in unemployment benefits. But the plan is for Elkarfa to finish his final two classes and find something better.
The couple decided “let’s use this time, go back to school,” said Hmito, 38, who worked at Dunkin’ Donuts before their second child was born. “Once it’s over, we can get better jobs with financial stability, and maybe it comes with extra time to spend with the kids instead of working two shifts making coffee and sandwiches.”
Massachusetts has the sixth-highest number of unemployed workers set to lose benefits, according to The Century Foundation. And, in keeping with a national trend, those on the bottom rungs are being hit hardest. Employment rates for people in Massachusetts making below the national median wage — around $37,000 a year — fell 11.1 percent from just before the pandemic, while they rose 2.6 percent for those making above the median, according to Opportunity Insights, a research organization at Harvard University.
There is no shortage of jobs: more than 237,000 openings in Massachusetts, according to the state’s executive office of labor and workforce development. The agency recently held a weeklong virtual job fair — the largest in state history — and is planning to use federal COVID-relief money to retrain 52,000 people.
With an unemployment rate below the national level, at 4.9 percent, and high vaccination levels, Labor Secretary Rosalin Acosta said in a recent briefing that overall, the Massachusetts economy is in a relatively good place, but she acknowledged getting people back to work will be a long process.
The increased reliance on technology to train and hire workers, and a lack of assistance for non-English speakers to access that technology, is a major concern, said Karen Chen, executive director of the Chinese Progressive Association.
“I think the digital divide is going to continue to be a problem,” she said.
At the same time, more people want jobs that can be done from home, said Caroline Koty, a senior mobility mentor at the Boston antipoverty nonprofit Economic Mobility Pathways. But not everyone has the experience to do so. Koty currently works with 15 households, five of which will soon be completely cut off from unemployment benefits, several of them run by single mothers who worked in hospitals, nail salons, restaurants, and security jobs.
“It’s so competitive,” Koty said. “Everyone in the world wants remote job opportunities right now.”
Even people with years of experience and advanced degrees are struggling. Linda Eknoian, a 50-plus former federal government contractor in Boston who was let go in December, has a master’s degree, but is frustrated by the lack of response to her job applications.
“I think a lot of it has to do with age,” said Eknoian, whose benefits are set to be cut off at the end of the week.
Meanwhile, some frustrated employers are holding out hope that the expiration of benefits will solve their labor shortages.
Amrheins restaurant in South Boston recently posted a note on its door asking customers to be patient as it struggles with a lack of employees: “Sadly, due to government handouts, no one wants to work anymore.”
Neil Abramson, owner of the Cutie Patuties and Cutiques consignment stores and a warehouse in Leominster, has made a few hires recently, including several people who previously worked in education and health care and were tired of the “rat race,” and one woman who was let go from a nursing home because she refused to get vaccinated. But he still has to close one store early every day due to a lack of staff.
As Sept. 4 approaches, however, he’s seeing more interest: he posted ads for two jobs and received 16 applications in the first 18 hours; in July, similar postings received just 12 applications over an entire month.
But Abramson is picky — and not interested in hiring someone who was “willing to sit home just to collect the check,” noting, “those people don’t typically make great workers.”
Employers generally prefer to hire people who are still working; so, those who’ve been on unemployment since the start of the pandemic, by choice or not, may be less appealing to hiring managers.
Moreover, just because benefits are going away doesn’t necessarily mean the unemployed will flood the job market, studies have shown. Arindrajit Dube, an economist at the University of Massachusetts Amherst, found that in 12 states that ended unemployment assistance in June, the number of people with paid employment actually fell, by around 1.4 percent, by early July.
The labor shortage may have less to do with extended benefits than the sheer number of employers trying to hire workers at the same time, said Peter Cappelli, a management professor at The Wharton School at the University of Pennsylvania. That, and widespread fears about the virus, are what makes the current situation unusual, he said.
Enhanced jobless benefits have also allowed job seekers to be more choosy. “It just means that people aren’t so desperate,” he said.
But now that this extra income is going away, some people are starting to feel that way.
Delmy Martinez, 36, who lost her job cleaning offices in downtown Boston at the start of the pandemic, just found out her $460 a week unemployment check is ending. “That’s why I think I always have a headache,” she said, speaking in Spanish through a translator.
Her husband still works installing hardwood floors, but her loss of benefits means Martinez may not be able to pay her cellphone bill or buy rheumatoid arthritis medicine for her mother in Guatemala. Martinez has looked for jobs in restaurants and at a tortilla factory, but still hopes to return to her union cleaning position, which allowed her to work nights while her husband stayed home with their children in Revere.
She made more on unemployment than she did working, but worries that being out of work for so long will hurt her application for political asylum.
“I don’t want to look like a burden on the state,” she said.
Ishwar Lamichhane has applied for more than 300 jobs, with no results, even after taking IT classes to expand his options. Lamichhane, 46, who’s from Nepal, was the assistant manager at Out of Town News in Harvard Square for 11 years when it closed in the fall of 2019, and he’s been searching for work ever since, mostly in IT customer service and help desk support. It’s been a frustrating experience. Lamichhane said he’s seen entry-level contractor positions that still require years of experience, and found so few opportunities at the recent state job fair that he considered the whole thing a “mirage.”
He and his wife, who has returned to work part time at a Newton spa, are about to be “abandoned” by the government when their unemployment benefits run out, Lamichhane said. If he doesn’t find work soon, Lamichhane isn’t sure how he’s going to pay the mortgage on their house in Medford.
“Only God knows,” he said.
Correction: An earlier version of this story misstated when Linda Eknoian would lose her unemployment benefits. The story has been updated to reflect the correct timing.