Republican governors in about a third of the states have decided to cut off $300-a-week federal unemployment benefits to their jobless residents, saying the extra money discourages the unemployed from looking for work.
The decisions, made in 17 states so far, will scrap the extra cash—on top of regular state unemployment checks—as early as June 12. The federal benefits were not scheduled to end until Sept. 6.
Montana was the first to end the federal benefits, on May 4. Others include Alabama, Arizona, Arkansas, Georgia, Idaho, Iowa, Mississippi, Missouri, New Hampshire, North Dakota, Ohio, South Carolina, South Dakota, Tennessee, Utah and Wyoming.
Most of the governors argue the enhanced checks were hampering employers’ efforts to fill jobs.
“Employers are telling me one of the big reasons they cannot recruit and retain some workers is because those employees are receiving more on unemployment than they would while working,” said Idaho Gov. Brad Little, a Republican, in a typical statement.
“My decision is based on a fundamental conservative principle—we do not want people on unemployment. We want people working. A strong economy cannot exist without workers returning to a job.”
But some studies dispute that argument. Over half of people who got an earlier federal unemployment bump of $600 a week returned to work before the supplement expired, many to their prior employers, according to a February paper from Assistant Professor Peter Ganong and others at the University of Chicago Becker Friedman Institute for Economics.
“This finding is qualitatively inconsistent with a large disincentive effect from the benefit supplement,” the study found.
Arkansas Gov. Asa Hutchinson said as his state emerges from the pandemic, “retail and service companies, restaurants, and industry are attempting to return to pre-pandemic unemployment levels, but employees are as scarce today as jobs were a year ago.” The extra benefits will end June 26 in Arkansas.
Arizona Gov. Doug Ducey added a twist to his decision to axe the extra unemployment benefits—a $2,000 bonus for those who get a job (under certain circumstances that mostly apply to lower-income workers).
But not all Republican governors are making the move. Massachusetts GOP Gov. Charlie Baker signaled he wouldn’t do so, because his focus is to “aggressively reopen our economy and create the jobs for people and then let people find their way back to work,” the Boston Herald reported.
However, in Alabama, Gov. Kay Ivey said her decision to end the federal subsidy was based on her contacts with the business community.
“Among other factors, increased unemployment assistance, which was meant to be a short-term relief program during emergency related shutdowns, is now contributing to a labor shortage that is compromising the continuation of our economic recovery,” she said in a statement.
But Jenna Gerry, attorney at the National Employment Law Project, a progressive group that fights for workers’ wages and jobs, said her group is “disheartened” by the governors’ “cruel and uninformed move.”
“There’s not a labor shortage, there’s a shortage of living wage jobs, there’s a shortage of child care,” she said in a phone interview. “Workers want to work, but they want suitable jobs. … Give them paid leave and child care and they will go back to work.”
The National Employment Law Project wrote to Labor Secretary Marty Walsh, arguing that under the federal Pandemic Unemployment Assistance program, states are not allowed to return the funds before they expire in September.
The group called on Walsh to continue to make the payments, regardless of states’ decisions not to accept them, by either requiring the states to continue the program under the CARES Act or letting other states administer the payments to the unemployed who live in the states where governors have rejected the funds.
Labor Department spokesperson Egan Reich did not directly address the letter, saying in an email that the Biden administration and the secretary “have been doing all they can to take concrete action to prevent anyone from falling through the cracks as we know unemployment benefits have served as a vital lifeline for workers throughout the pandemic—to help them buy food, pay rent and remain healthy.”