This Is What Happens When You Smash Great Expectations

It’s a riddle that economists have struggled to decipher. The U.S. economy seems robust on paper, yet Americans are dissatisfied with it. But hardly anyone seems to have paid much attention to the whirlwind experience we just lived through: We built a real social safety net in the United States and then abruptly ripped it apart.

Take unemployment insurance. The CARES Act, passed in March 2020, included the largest increase in benefits and eligibility in American history. It offered people “a sense of relief,” said Francisco Díez, senior policy strategist for economic justice with the Center for Popular Democracy, which organized unemployed people in the pandemic. “A feeling like they could breathe and figure out what they could do.”

LaShondra White was one of them. When she was furloughed from her job at a Kohl’s department store in Detroit in March 2020, she started receiving more than $600 a week. It was “my chance to get out of this situation,” she told me last year, a situation in which her pay was “horrible.” She had always wanted to own her own business, so with the extra money she fixed her credit score, rented out a commercial space and opened an eyelash studio. Her studio is still open and largely booked.

In 2019, unemployment insurance kept 500,000 people out of poverty; in 2020, that figure was 5.5 million. Yes, the program was riddled with problems, particularly technological ones, that made it difficult for many people to get enrolled quickly. But once they were covered, “They saw something close to the actual level of benefits that they deserve,” Mr. Díez said.

It was short-lived. By July 2020, the extra $600 in benefits had lapsed, and it wasn’t until December 2020 that Congress approved $300 payments with new restrictions. By May, some states started opting out, leaving their residents with the paltry benefits they would have gotten prepandemic.

In those states, “There was a real sense of terror and concern and fear and abandonment from the politicians who chose to cut the benefits off early,” Mr. Díez said. “It really harms whatever faith they had in the nature of government as an institution that can actually see their struggle.”