These Californians made six figures before COVID hit. Here’s how much relief they got
Families earning $100,000 before the COVID-19 pandemic could have collected well over $127,000 over the last two years in government benefits such as unemployment and stimulus payments, a new study found.
Those benefits were part of COVID-19 relief packages pushed by Presidents Joe Biden and Donald Trump.
The benefits are a “not insignificant” factor in the slow return to work, said Michael Bernick, a former California Employment Development Department director and now an employment attorney at Duane Morris LLP.
Though the nation’s unemployment rate was 3.8% in February, the data “continue to show a slow return to work and still-low labor force participation rate,” Bernick said.
The American Institute for Full Employment, a nonpartisan group that studies poverty and unemployment issues, analyzed how people have fared with the benefits.
Among the examples is the impact on a California family of four with a combined annual income of $100,000 before the pandemic hit two years ago.
How the COVID stimulus helped
Here’s how they could have benefited:
▪ Unemployment. California’s maximum benefit in 2020 and 2021 ranged from $450 a week to $1,050, depending on federal legislation.
The $100,000 earners, if jobless, could have collected $116,000 in unemployment insurance in California if both parents were unemployed for 17 months through September 2021, when the extra federal unemployment benefits ended.
▪ Stimulus payments. There were three rounds, in March and December 2020 and March 2021. If the family of four qualified, it would have received a maximum of $11,400.
▪ Child care. The study estimated that the family would save thousands in child care, since parents were home.
They also could have received monthly payments of $250 to $300, depending on their child’s age, from July through December 2021.
▪ Housing. The family could have saved in housing costs, because of COVID-triggered laws allowing people to delay their monthly mortgage payments.
Economists and Washington officials have cited the government benefits as a big reason for the Great Resignation, or Great Sabbatical, as John Courtney, president of the organization that analyzed the data, put it.
Bernick saw reasons other than benefits for the slow labor force recovery, notably health concerns, school closings, child care and career reconsideration.
At its December meeting, the Federal Reserve Board of Governors and the Federal Open Market Committee cited the same factors.
Some members thought people would return to work because of “depleted savings, particularly for lower income households.”
The U.S. labor force grew in February, according to data released last month by the federal Bureau of Labor Statistics, but economists still saw the impact of the pandemic.
Persistent unemployment
The bureau found 6.3 million people were unemployed last month, more than the 5.7 million two years earlier, just before the pandemic hit. While California’s rate has dropped significantly, it was still higher than the national average in January, the last month state data have been reported.
California’s January rate was 5.8%, the second highest state rate in the nation. Only New Mexico, at 5.9%, was higher.
While labor shortages have eased somewhat, “Workers are in no hurry to return to work. Many workers are still reluctant to go back to work because of the child care responsibilities and COVID concerns. Others have retired early. There are lots of jobs available in the midst of labor shortages,” said Sung Won Sohn, chief economist at SS Economics, a Los Angeles-based consulting firm.
“Consumers have money to burn and not everyone is willing to jump into the labor pool just yet,” he said.
As the government benefits have wound down, Courtney estimated that to maintain its current lifestyle, the $100,000 family needs one parent to be working now.
If the other parent tapped their savings to stay afloat financially while remaining unemployed, they would still need to return to work by summer to maintain their income level, he said.
Those who earned less face a similar timetable. Courtney’s group examined the impact of COVID-19 relief on a family with two parents and two dependent children and a combined income of $63,000 in 2019.
If both parents lost their jobs in March 2020, and stayed unemployed for 17 months, they would have received $105,000 in unemployment and stimulus payments.
That would give them enough to maintain their income level during the 17 months and have an additional $16,200. If one parent then returned to work, Courtney figured, the other parent could have stayed unemployed – and still received some benefits – through the middle of last month.
Add in the savings from child care and housing, and that parent could probably stay unemployed through the summer or even later this year.
This story was originally published March 22, 2022 at 5:00 AM.
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