Unemployment benefits expire this weekend for about 100,000 Minnesotans

About half of Minnesotans now receiving unemployment aid will see their jobless benefits end this weekend as several programs Congress put into place as a pandemic-related safety net expire.

In all, about 100,000 people will get their final payments in the coming weeks, and the $300 a week provided as an enhanced benefit will also come to an end.

Many workers have depended on those stepped-up federal benefits to pay their bills, and afford rent and groceries in the last year and a half. Benefits were expanded to include aid for gig workers and the self-employed, people not usually covered by unemployment insurance. Aid also was extended for those who had exhausted their six months of state jobless benefits.

"It's going to be really the biggest drop-off in benefit payouts we've ever seen," said Steve Grove, commissioner of the Minnesota Department of Employment and Economic Development (DEED). "It's going to be a big shift in our economy."

Beginning this week, those still eligible for unemployment benefits in Minnesota will go back to receiving just half of their previous wages up to a maximum of $762 a week. The average payout will be around $400 a week, according to the state.

It's a significant moment for the U.S. labor market, which has been rebounding but still has millions of people out of work. The latest jobs report released Friday showed hiring slowed sharply last month as businesses and workers grappled with concerns about the more contagious delta variant. At the same time, some industries are still facing a worker shortage.

The question now is how many of these workers who are losing benefits will be willing and able to find jobs as the delta variant fuels a surge in COVID-19 cases, including breakthrough infections among those who are vaccinated.

Until recently, many economists, labor experts and employers had expected the sunsetting of these federal jobless benefits to be a catalyst, along with widespread vaccine availability and the reopening of schools for in-person learning, that would lead to a bigger gain of jobs this fall.

"The delta variant is tempering some of the optimism that I felt a few months ago," Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said in an interview.

Kashkari still thinks the recovery will continue, and that there will be an increase of labor supply this fall, but there's more uncertainty now about the pace and size of that bump.

For one, it's still unclear how big a role the enhanced unemployment benefits played in keeping people from returning to work, and what impact their expiration will have.

Suspecting that they were major disincentive for job seekers, many Republican-led states ended the federal benefits earlier this summer. But some research has shown that those states have not seen much more job growth compared to states that kept the benefits in place.

Kat Coats has been receiving unemployment benefits since losing her job as a bartender in downtown Minneapolis in March 2020. Even though her benefits are ending, she's planning to hold out looking for a job as long as she can. She continues to receive rental assistance, and plans to use savings from stimulus payments and unemployment benefits to tide her over for a while.

"The last thing I want to do is work in an environment where people aren't masked," she said. "It's too real and too contagious right now."

In the meantime, she, like many other Americans, took time during the pandemic to re-evaluate what she wants to do. Bartending has taken a toll on her physically and mentally, she said. And she didn't see a way to move up.

A couple weeks ago, she started a two-year program at Minneapolis Community and Technical College to embark on a new career where she sees more advancement opportunities: welding.

Some out-of-work Minnesotans won't be able to afford to wait, even if they worry about being exposed to COVID at work and bringing it home to unvaccinated children or vulnerable family members, said Sheilah Howard, director of career services at Jewish Family and Children's Service of Minneapolis

"There will be people who financially won't be able to hold on and they will take whatever job they can get," Howard said. "I worry they might be job hoppers for a while."

Child care has been a particularly big challenge during the pandemic, keeping some parents on the sidelines while children have been home for remote schooling. The return to in-person learning this fall, which many initially thought would free up parents to work, remains unsettled with COVID-19 infections rising in children and schools still wrestling with mask requirements.

"At any point, if you have a child at a child care center or in school, you could find out that there was COVID there and now the child has to quarantine for two weeks," Howard said. "So it's hard to commit to employment if you can't commit to 'I will be available every week,' because you have that instability of what's going to happen with your child."

Some are looking for work despite the uncertainty.

Julene Harrison of Minneapolis was a delivery driver for Bite Squad and an auto-parts company. She had to stop working at the outset of the pandemic when her children pivoted to remote schooling.

She was only able to get a few weeks of unemployment benefits, and moved back onto public assistance. With her children returning to in-person schooling, she has begun applying for jobs.

"They start school this week so I can start working again," she said.

"Help wanted" signs are a common sight in the windows of many restaurants and retail stores, evidence that low-wage workers are in high demand. But job coaches and employment directors say options may be harder to come by for midcareer professionals.

"They're having a more difficult time finding a job that is the right fit for them and their skills," said Jim Durdle, employment services director for Goodwill-Easter Seals Minnesota. "I think part of that is because so many companies have been restructuring their workplace."

Since spring, DEED has called about 70,000 Minnesotans still receiving jobless benefits to help them with their job search.

"We continue to really push that with people on these benefits," Grove said. "It's actually a really good time to be a job seeker right now."

Grove acknowledged that people's concerns about the delta variant are real, which will lead to some uncertainty this fall.

DEED projects that about 86,000 people in the state will be receiving jobless aid by mid-October. That's down from about 200,000 in August and a pandemic peak of nearly 560,000 in May 2020.

Many employers have been raising wages, providing signing bonuses and other incentives to try to find workers in a challenging labor market. Grove said he expects employers will have to continue doing creative things to attract workers even after the federal benefits expire.

"Our hope is people are getting vaccinated, getting masked up, being safe, and, of course, getting back to work and contributing to the economy," he said.