Adrienne Roberts, Detroit Free Press

Sandra Smith lost her job when restaurants shut down for dine-in service in March. The waitress didn’t start receiving unemployments 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.

Sandra Smith, 37, of Detroit.

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, l’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.

Michigan has one of the highest rates of unemployment compared with other states — topping 21% in May compared with 13% nationwide, and is among the states distributing the most money in unemployment benefits.

The state said it has distributed more than $15 million in benefits to 2 million workers through the end of last week. Since March 15, 2.1 million eligible claimants have applied for state and federal benefits, the state said.

“That extra $600 without a doubt has helped people,” said Mike McWilliams, an economic forecasting specialist at the University of Michigan.

He said the federal pandemic assistance has helped total income in Michigan remain steady during the crisis. McWilliams expects that if the money expires at the end of the month, the average household income will fall 7% in the third quarter in Michigan.

“That will impact personal spending, and in households where people are still unemployed, they will prioritize bills,” he said.

Uncertainty already affecting the economy

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 think tank Economic Policy Institute, which said if the $600 benefit was 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.

That’s what Smith said she has been doing. Before she started receiving benefits in June, she wasn’t able to afford the $800 monthly rental payment.

Smith turned to Here to Help, a private foundation that offers assistance to temporarily impoverished residents of Oakland and Wayne counties who can’t afford basic necessities. Through the foundation’s “Roof Over Head” program, she was able to get financial help to make May’s rent.

Bob Schwartz, a founder of Here to Help, said the rent payment program has been one of the foundation’s most popular throughout the coronavirus pandemic, especially earlier when there was a lag in unemployment benefits.

Schwartz said he was happy to help people keep on top of their rent payments, even though he knew they wouldn’t lose their homes because of a moratorium on evictions.

Soon, that will no longer be the case.

Late last month, Gov. Gretchen Whitmer extended an order suspending evictions of residential renters for nonpayment until July 15, but said she intends to let it lapse after that date.

State officials estimate that a backlog of more than 75,000 landlord/tenant cases could be filed once the ban is lifted, compared with the nearly 17,000 cases that are filed a month normally, a number that will likely increase if renters aren’t back to work and can’t afford rent payments.

More than an economic risk

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.

“We wanted people to stay home at least initially, and this was helping that,” said McWilliams. “It looks like there’s been a slight increase in (coronavirus cases in) Michigan and it’s worrisome.”

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

“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.

What job?

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.”

Contact Adrienne Roberts: amroberts@freepress.com.