Matt Marfoglia was living paycheck to paycheck before the coronavirus pandemic. Now, while unemployed, he’s barely scraping by.
The 51-year-old was furloughed from his job as a waiter at The Tasting Kitchen, a high-end Italian eatery in Los Angeles, in March.
The one thing that’s kept him afloat: an extra $600 a week in unemployment benefits provided as part of a recent federal relief measure.
Even with the extra benefits, Marfoglia has been pocketing about $1,600 less per month.
But that aid will lapse after July, absent government action — potentially sending his income, and that of millions of other Americans, off a cliff amid the worst employment crisis since the Great Depression.
“To be honest, I’m terrified,” Marfoglia said. “I’m right at the edge right now.”
Marfoglia is one of nearly 30 million people currently receiving unemployment benefits, a figure well above any other period since the unemployment insurance system was created in the 1930s.
The crisis was spurred by the swift and unprecedented economic carnage wrought by Covid-19, which led to a virtual lockdown of the U.S. economy to halt spread of the virus.
$600 unemployment benefits
The CARES Act, a $2.2 trillion relief package enacted in March, greatly expanded unemployment benefits, in part by tacking a $600 weekly enhancement onto traditional benefits paid by the states.
State benefits generally replace less than half a worker’s prior take-home pay. The $600 enhancement aimed at fully replacing prior wages for the average worker (about $1,000 a week).
But not all workers are average — some make more and some less, relative to prior pay.
Researchers at the Becker Friedman Institute for Economics at the University of Chicago found that about two-thirds of workers eligible to collect unemployment insurance can receive benefits that exceed lost earnings.
Normally, it’s not ideal policy for unemployment benefits to exceed job pay, according to labor economists, who said it may cause distortions in the labor market. Republicans have argued it could create a disincentive for people to return to the workforce.
Yet many believe it was good policy at the time, when the health crisis forced people to shelter in place rather than work.
Perhaps more important, antiquated state unemployment systems couldn’t handle a change to their benefit formulas to ensure pay didn’t exceed prior wages, according to economists and lawmakers.