The Republican governors of 24 states have announced that they will block the federal government from supplementing the unemployment benefits provided to employees in their states, citing that workers are saying they are getting more money staying home than they would at work from unemployment. These claims, factually dubious, represent real, actual, harmful bad news for the families that are relying on the extra payments to stay afloat amidst the economic devastation of the pandemic.
And a new report shows that despite widespread claims of labor shortages, many millions of American workers are looking for work — and not finding it.
Here’s what you need to know about the disappointing development, including which governors are cutting off unemployed workers in their states from these benefits, what programs are affected, and why, according to a new analysis from the Economic Policy Institute, cutting unemployment benefits is more about cruelty than problem-solving.
Which states are cutting benefits?
The following states are cutting federal unemployment benefits:
- New Hampshire
- North Dakota
- South Carolina
- South Dakota
- West Virginia
Maryland, Massachusetts, and Vermont are the only states with Republican governors who have not announced their intention to opt-out of the federal programs.
What benefits are being cut?
The federal government has been supplementing normal unemployment insurance with additional funds since the beginning of the pandemic. Per the American Rescue Plan Act, the current additional amount, $300 per week, is due to expire on September 30. That’s the money—free to states, it’s entirely federal—that governors are turning down.
Many who have exhausted their state-funded aid or are otherwise ineligible for it have also been receiving federal funds and will no longer do so.
Some states are also opting out of Pandemic Unemployment Assistance, a separate program that provided benefits to self-employed individuals, those seeking unemployment, and others ineligible for regular unemployment compensation. Gig workers like Uber drivers are covered by this program. Many are also exiting the Pandemic Emergency Unemployment Compensation program, which has been helping workers classified as long-term unemployed make it through the pandemic.
Why is it too early?
The purpose of unemployment insurance is to give workers time to find a suitable next job after losing employment, a job that matches their skills and pays a decent wage. The evidence suggests that economic conditions in these states have not yet made it possible.
In April, there were 8.2 million fewer jobs in the U.S. than there were before the pandemic, between 9 and 11 million fewer than the country would have needed to keep up with the growth in the working-age population over the past year. The unemployment rate is currently 6.1 percent, which means nearly 10 million people are actively looking for work but can’t find it, a figure that doesn’t include those who’ve exited the workforce since the pandemic began (but would rejoin if they could) or who are currently furloughed from their jobs.
The bottom line is that economic conditions have not returned to a pre-pandemic “normal.” And even if they did, workers would still deserve unemployment benefits that were generous enough to allow them to engage in a real job search without worrying about survival.
Why is the “labor shortage” not a good reason to cut UI?
These 24 governors, citing anecdotal evidence from employers of minimum wage workers who are struggling to hire, say that they need to limit unemployment benefits in order to get people back into the workplace. In the process, they are ignoring the evidence that simply offering better wages is a better way to fill positions, not to mention how the so-called free market the GOP constantly celebrates is supposed to operate.
Then there’s the simple fact that cutting unemployment isn’t likely to help the situation.
The EPI cites multiple empirical studies that have found that unemployment benefits are not limiting job growth in a meaningful way. And the low-wage sectors, where more generous UI benefits would be most likely to keep people out of the workforce since the difference between wages and benefits is the smallest, have been growing quickly. Leisure and hospitality was the fastest-growing job sector in April, for instance.
There are a lot of other factors—a lack of child care and jobs that are more dangerous during the still-happening pandemic among them—that are keeping people out of work. Cutting benefits for those people in an effort to force them back to work lets businesses refuse to raise wages or improve working conditions to entice them back.
And even with the federal benefits in place, more workers are returning to the workforce; claims for both regular UI and PUA have fallen by 30 and 38 percent, respectively, since the beginning of February. Those still relying on these programs are those who need them most.
“Cutting off adequate supports to these workers to try to force them to take whatever job might be available—even if it is low-paying, high-risk, not suited to their skills, or incompatible with their responsibilities at home—is cruel and not in the long-term best interest of any state’s workers or businesses,” the EPI report concludes.
Pandemic innovations like stimulus payments, universally free COVID-19 vaccinations, and an unemployment system that allows workers to be slightly choosier when job-hunting have all made the United States a more humane place for workers. But the efforts of these 24 governors show that such gains are fragile and, particularly given the expiration dates built into many pandemic improvements, likely to be short-lived.