The new $1.9 trillion American Rescue Plan signed into law on Thursday will help millions of Americans and businesses immediately as it issues more loans and stimulus checks.
But economists warn while the new stimulus will help boost the economy, it will not have as strong of an effect on the unemployment rate.
“We are in a jobs hole that’s on the order of 12 million jobs,” said Heidi Sheirholz, a labor economist with the Economic Policy Institute. “It’s just enormous.”
Although the current unemployment number of 10.1 million is well below its April 2020 high of 23.1 million, it is still nearly twice as high as pre-pandemic levels of 5.7 million according to the Bureau of Labor Statistics (BLS).
That is not taking into account the 2.5 million jobs that the BLS estimated would have been created in 2020.
“This [stimulus] will help so many people,” said Sheirholz. “It’s just a groundbreaking package, [but] it takes more time to have a business get formed, built, and to hire people so [lowering unemployment] is not going to happen overnight.”
Stephanie Dudley is one of those people relying on the American Rescue Plan. A mother of two that lives in Los Angeles, she has been unemployed since the pandemic first hit.
She says looking for work has been difficult and she has relied on unemployment as a way to make ends meet.
“I think, overall, [the process of getting employment] has been sluggish,” she said.
In its most recent report, the Congressional Budget Office said the U.S. economy would reach its pre-pandemic output by this summer, which is faster than expected, but the CBO says unemployment will not reach its pre-pandemic level until 2024, which Sheirholz says is a reason for concern.
“We know things will be improving by September [when the unemployment provisions are set to expire], but we are still going to have a big jobs hole by September 6,” said Sheirholz. “There won’t be enough jobs to go around by then.”