The $600 benefit ends in July. Economists are not optimistic about what happens next

DETROIT – Sandra Smith lost her job when restaurants shut down for dine-in service in March. The waitress didn't start receiving unemployment until June, even though she applied in April.

While she recently went back to her job as a waitress at the restaurant Calexico in downtown Detroit, it's not the same as before. Smith is making less than half of what she did, due to the restaurant operating at half capacity and less demand.

She is planning to file for partial unemployment benefits because she's working less than full-time, but is worried about the extra $600 federal benefit expiring at the end of July.

"It's definitely going to be a struggle without extra pandemic assistance," said Smith, 37, of Detroit. "Without the pandemic money, I'll have to live day-to-day. I'll pretty much always be broke until things pick back up."

For Smith, the benefits provided a lifeline, helping her to pay rent and utilities, and to put food on the table for the three children she has at home.

That benefit officially ends nationally at the end of the month, but will expire on July 25 in Michigan because of the way the state's unemployment payment schedule is set up.

Moving forward, claimants receiving unemployment benefits will collect money only from the state, which maxes out at $362 a week. That's unless Congress approves new legislation extending the $600 extra benefit.

By and large, Democrats are pushing for an extension, either at the full or a reduced amount, while many Republicans argue the $600 encourages claimants to not go back to work because they make more collecting unemployment.

"The $600 made it so that people could get by," said Michele Evermore, senior policy analyst of the Washington, D.C., nonprofit National Employment Law Project. "It prevented the economy from collapsing."

The extra weekly payment of $600 is part of the CARES Act, a $1.8 trillion package Congress passed to help the country face the economic consequences of the coronavirus pandemic.

The effects of the benefit going away are already being felt, or will be soon, economists say.

"I'm really concerned about what happens to the economy particularly closer to the last week in July if they haven't extended the $600," Evermore said. "The economy hasn't collapsed and that's remarkable. Benefits like the $600 are what will keep us afloat."

Evermore points to a recent study from the nonpartisan, nonprofit Economic Policy Institute, which said that if the $600 benefit were extended for a year, until July 2021, Michigan's gross domestic product would be boosted by 6.6% and it would support the employment of nearly 200,000 workers.

Economists say it's likely the benefit has thus far been spent mostly on rent and utilities — not big-ticket purchases.

The $600 federal assistance was not just intended as a way to keep workers and the economy afloat. It was intended to keep more people at home during a health crisis, and give them a cushion to do so.

If the benefit ends, and more workers who are vulnerable or have unsafe jobs resume work, cases could ultimately rise.

"My concern is people are more likely to go back to unsafe work," said Evermore. "That's not good for the economy" if businesses are forced to close.

But for some people, there's simply no job to reclaim.

"If you cut off that benefit for them, many of them will be facing severe hardship," said Charley Ballard, a professor of economics at Michigan State University.

He said those jobs that aren't coming back are usually those that involve close personal contact, such as jobs at restaurants, hair and nail salons, and in the airline industry. Those jobs typically pay less and are held by women and minorities, leading them to be disproportionately affected.

Ballard proposes a solution that he thinks would benefit both employees who are back at work and those who have no job to reclaim: keep paying $600 to those who can't find employment and reduce the partial benefits for those who have returned to work.

"What the law doesn't do is distinguish between two very different people," he said. "If you have people looking at an extended period of unemployment without an additional cushion, many of them will be facing destitution."