Usually when someone gets laid off from their job they cut corners until they land themself a new job — at least that was the case during the Great Recession when some 15 million people lost their jobs.
But the pandemic has proven to be anything but business as usual.
Millions of Americans received an extra $600 a week in pandemic-related unemployment benefits from March 2020 to July 2020, and $300 from January 2021, the last of which are due to expire on Sept. 7.
Despite more than 23 million job losses during the pandemic-induced recession, those individuals didn’t cut back on spending.
In the first half of 2020, median spending levels for those laid off during the pandemic were 10% higher than what they had been pre-pandemic, according to research published by the JPMorgan Chase Institute JPM this week.
The report is based on data from de-identified Chase checking account customers that date back to 2007, including some 2 million customers that experienced job loss.
Without the extra $600 in unemployment benefits, the researchers estimate that median spending levels of individuals laid off could have declined 5% to 10% compared to spending levels prior to the pandemic.
Unemployment supplements during the pandemic “really prevented jobless workers from having to cut back on spending,” said Fiona Greig, co-president of JPMorgan Chase Institute.
In the first half of 2020, median spending levels for those laid off during the pandemic were 10% higher than what they had been pre-pandemic
“We also found that low-liquidity and Black and Latinx families exhibit a stronger spending response to jobless benefits, illustrating that targeting income supports to low-liquidity families can limit welfare losses in the face of job loss and stimulate aggregate demand.”
In fact, some started spending more once it expired in July using the money they stashed away from prior weeks of unemployment benefits, separate Chase data suggests.
And now? More than 17 months into the pandemic, there remains a record 10.1 million job openings in the U.S. while some 8.7 million people remain unemployed.
More than 7 million Americans did not work during July 21 through Aug. 2 to look after children while some daycares and schools remain closed, according to data from the U.S. Census Bureau’s Household Pulse Survey.