Montana opts to end $300 unemployment boost. Other states may, too

Greg Gianforte, a Republican from Montana, will end federal unemployment programs on June 27.

William Campbell | Corbis News | Getty Images

Signs of things to come?

According to labor experts, Montana appears to be the first state to opt out of federal funding early. Workers in other states have until September 6th to collect extended aid.

“Seems punitive and likely some form of things to come in many red states,” said Arindrajit Dube, professor and labor economist at the University of Massachusetts Amherst, in a tweet.

Among other Republican-led states, there are precedents where federal unemployment funds are turned down during the pandemic.

For example, South Dakota was the only state to opt out of support for lost wages, a weekly $ 300 supplement to unemployment benefits. The federally funded payment was issued for up to six weeks from August.

Idaho and South Dakota have also chosen not to pay some self-employed and gig workers a weekly stipend of $ 100. The payment was part of a $ 900 billion paw passed in December. (Montana also decides to end this payment in June.)

Labor shortage

Montana rejects extended federal benefits to address “severe labor shortages,” Gianforte said.

The state’s workforce is 10,000 smaller than before the pandemic and the unemployment rate of 3.8% is near pre-Covid lows, he said. (The national rate was 6% in March.)

Weekly job postings are near record highs and labor shortages affect nearly every sector in the state, according to the Montana Department of Labor and Industry.

It’s not just about people willing to take the job, it’s also about what’s realistic. Restaurants don’t always want to hire the college professor.

Andrew Stettner

Senior Fellow at the Century Foundation

“Incentives are important, and the huge expansion of federal unemployment benefits is now doing more harm than good,” said Gianforte.

As part of the Montana Return-to-Work Bonus Initiative, employees will receive a payment of $ 1,200 if they have been actively unemployed as of May 4 and work four full weeks.

Find a job

Some labor experts disagree with the state’s move. They argue that existing policies should not be removed until a full recovery has been made.

For one thing, offering a return to work bonus doesn’t mean people can find full-time jobs quickly or easily, they said. These dynamics can mean that current unemployed people have run out of money to pay their bills in the meantime.

“People are magically not going to find jobs,” said Andrew Stettner, Senior Fellow at The Century Foundation. “You may not get one until late summer.

“It’s not just about people who are ready to take the job, but also about what is realistic,” added Stettner. “Restaurants don’t always want to hire the college professor.”

In addition, a low unemployment rate masks the general pain in the labor market. It does not track workers who left the workforce to take care of children who are still learning from home or those who are reluctant to return to work due to the virus.

The discussion about labor shortages also does not take wages into account, experts said. A company may not be able to find workers who feel they are being paid too low.

According to Federal Reserve chairman Jerome Powell, pay does not appear to be increasing to attract workers.

“We don’t see wages rising yet,” Powell said in a speech last week. “And we’d probably see that in a really tight job market.”

Of course, employers hard hit by the pandemic – like a restaurant that is still underutilized – may struggle to raise wages.

The rise in job openings could also be due to mounting pain in an unprecedented era of job expansion rather than a labor shortage, Dube said.

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