Several states have canceled additional federal unemployment assistance in the US.
Miami World / Telemundo 51
More than a dozen states are canceling pandemic-era unemployment programs, giving up billions of dollars in federal funding that would otherwise flow to jobless residents.
Here’s what you need to know about state decisions and what’s at stake.
So what’s going on?
At least 16 states have chosen to exclude themselves from federal programs that pay unemployment benefits.
As of Thursday, the list includes Alabama, Arkansas, Arizona, Georgia, Idaho, Iowa, Mississippi, Missouri, Montana, North Dakota, Ohio, South Carolina, South Dakota, Tennessee, Utah, and Wyoming.
All are run by Republican governors. Montana was the first state to announce its withdrawal, on May 4.
The US government has a list of benefits on its website.
How soon will they be over?
The American Rescue Plan made these federal programs available until Labor Day, September 6.
States are ending their participation about two or more months early, from June 12 to July 10. This varies by state.
How many people will be affected?
Governors’ decisions would reduce or cut benefits for nearly 2 million people.
About $ 11 billion of total funding is at stake, according to Andrew Stettner, a senior fellow at the Century Foundation.
Randy Serrano has the information.
What programs are affected?
States are pulling out of the programs enacted by the CARES Act in March 2020.
Together, the programs increased the amount of weekly aid, extended its duration, and offered funds to workers who do not normally qualify for state benefits.
How will my benefits change?
States will no longer issue an additional $ 300 per week to workers.
Those who receive state benefits will continue to receive that assistance, which is generally equal to half of their pre-layoff wages. The average person received $ 350 a week in state benefits in March, according to the Department of Labor.
Benefits vary widely by state. Among states that choose not to participate, for example, they ranged from $ 195 per week in Mississippi to $ 480 in North Dakota.
Legal consultation: can you lose your job if you don’t get vaccinated against COVID-19?
Certain workers will not only get a cut in benefits, they will lose aid altogether.
Those groups include the long-term unemployed (who have exhausted their maximum state benefit allowance), as well as the self-employed, freelancers, and others who receive what is known as Pandemic Unemployment Assistance.
This is the case in most of the states in question, but not all. In Arizona, for example, residents are only losing access to the $ 300.
“This country was not built by Wall Street, it was built by the middle class,” said the president in his message to the nation from Congress.
Why is this happening?
Governors have pointed to a labor shortage as the driver for their decisions to opt out of federal funding.
They claim that the improved unemployment benefits offer an incentive for people to stay home and not look for work, leaving companies struggling to fill vacant positions.
“While these benefits provided supplemental financial assistance during the height of COVID-19, they were intended to be temporary and instead their continuation has worsened the workforce problems we face,” said Missouri Governor Mike Parson.
Is there a labor shortage?
The answer is difficult to pin down with the available data, according to economists. But the evidence suggests that a labor shortage is developing, at least in some areas and sectors.
The most compelling evidence is twofold, according to Daniel Zhao, a senior economist at Glassdoor, a job and hiring site.
Job openings hit a record in March, the Bureau of Labor Statistics reported Tuesday. Meanwhile, the US economy added 266,000 payrolls in April, much weaker than the one million expected, the Bureau said last week.
In other words, there is strong demand for labor as the economy reopens, but not an equivalent flood of workers on the payroll.
The shortage appears to be most pronounced in industries such as leisure and hospitality, which include food services and restaurants.
This is where most of the shortage anecdotes among business owners seem to originate and the reasons why companies like McDonald’s and Chipotle are raising wages and offering bonuses to attract workers, Zhao said.
Some states are likely to experience a job crisis more than others.
In Montana, for example, the job market appears to be close to the pre-COVID-19 state, unlike the rest of the United States, according to Peter Ganong, an assistant professor of public policy at the University of Chicago.
Many (but not all) states that choose not to receive federal benefits have unemployment rates below the national average of 6.1%. For context, the national rate is still almost double its pre-pandemic level of 3.5%.
Are Unemployment Benefits The Problem With The Labor Shortage?
Unemployment benefits are likely to play at least a small role, economists said.
Research suggests that higher benefits reduce the intensity of the job search. This was not a problem early in the pandemic when jobs were scarce. But it’s hard to say how much they may or may not be a factor now.
Are there other factors?
The coronavirus, not unemployment benefits, is probably the main problem, according to labor experts.
New daily infections, although declining, still number in the tens of thousands. And less than half (46%) of American adults are fully vaccinated, according to the Centers for Disease Control and Prevention. This proportion, which includes the elderly, is lower among the workforce.
Vaccines were also not widely available until recently. Workers need two to six weeks for the regime to be fully effective, which means that many cannot safely return to work until June, according to Diane Swonk, Grant Thornton’s chief economist.
There are other factors that contributed to the era of the pandemic as well: erratic reopenings of schools, childcare problems, and a dearth of after-school programs that greatly help low-income parents. Many baby boomers chose to retire early and may not rejoin the workforce, reducing the overall job supply.
The discussion about labor shortages is also often divorced from the issue of wages and hours: Workers may want a job but not at current wages or with erratic or part-time hours.
It can also be unrealistic to expect workers to accept a job at the same rate that jobs are posted. Supply of labor generally takes longer to respond than demand, Zhao said.
“I don’t think it’s possible to quantify how much each factor contributes to the labor shortage,” he said. “There are so many different headwinds at the same time.”
Additionally, states that choose not to receive federal unemployment funds may dilute some of the business demand, and the need for additional workers, if this contributes to lower spending locally.
Some states pay a return to work bonus. What’s that?
Montana and Arizona are replacing improved unemployment benefits with a one-time bonus for people who find and keep a job.
Arizona is offering bonuses of $ 1,000 and $ 2,000 (on a first-come, first-served basis) to those who find part-time and full-time jobs, respectively. They must complete at least 10 weeks of work.
Montana is paying a $ 1,200 bonus to people who find a full-time job for four weeks.
Is everything set in stone? Not necessarily.
Senator Bernie Sanders, I-Vt., And the National Employment Bill this week asked US Secretary of Labor Marty Walsh to intervene on behalf of workers.
They argue that Walsh has the legal authority to prevent loss of benefits for the self-employed, the self-employed and other workers who charge PUA, due to some wording in the CARES Act. (However, it appears that the same flexibility would not apply to other programs.)
It is unclear if the Labor Department will try to intervene.