States to end federal unemployment benefits for 400,000 this weekend

Indiana Governor Eric Holcomb speaks at the White House on June 26, 2020.

Al Drago / Bloomberg via Getty Images

More than 400,000 people are on the verge of losing unemployment benefits this weekend as eight states pull out of pandemic-era programs prematurely.

Alabama, Idaho, Indiana, Nebraska, New Hampshire, North Dakota, West Virginia and Wyoming are all canceling federal unemployment programs starting Saturday.

They are among the 25 states that will decline federal funding before it officially expires on September 6, affecting a total of approximately 4 million recipients.

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State governors, all Republicans, claim the improved benefits pay people to stay at home, creating labor shortages and making it difficult for companies to hire. Critics say other factors such as persistent Covid health risks and childcare obligations – no benefits – marginalize workers.

According to a CNBC analysis of the Department of Labor data, about 417,000 workers will lose their benefits on Saturday if the eight states end their participation in federal programs.

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This assistance includes an additional $ 300 per week as well as benefits for specific groups such as the self-employed and the long-term unemployed.

Four states – Alaska, Iowa, Mississippi, and Missouri – suspended federal aid last Saturday. According to a CNBC analysis, about 291,000 people were affected. (Alaska just ended the $ 300 weekly surcharge.)

The rest of the federal states will do this by mid-July.

Indiana lawsuit

Indiana residents sued Governor Eric Holcomb in state court Monday to keep the flow of aid going. They alleged the state had “violated the clear mandates of the Indiana Unemployment Act – to secure all rights and benefits for the unemployed.”

Some of the five individual plaintiffs, who are not named, cannot go back to work immediately. One is a school bus driver with three children whose work would not resume until the fall of the new school year.

Without social benefits, they would not be able to cover living expenses such as housing, utilities, food, health care and childcare, which would expose them to hardships such as evictions, claim the plaintiffs.

According to the governor’s office, the state employment service has taken all necessary steps to end its participation in the program.

“[The Department of Workforce Development] has notified affected applicants in a timely manner of the state’s withdrawal from federal programs and continues to connect affected hoosiers with the resources they need to acquire skills and work with employment, “a spokesman said.

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A judge is likely to rule quickly with the performances scheduled to end in Indiana on Saturday, said Andrew Stettner, a senior fellow at the progressive think tank The Century Foundation.

A victory for the plaintiffs could encourage residents of other states, he said.

“I think the gist of it are the provisions of the state law [plaintiffs are] on which this case is based are not just reserved for Indiana, “said Stettner.

Increased benefits

State unemployment benefit generally replaces half of a worker’s wages before dismissal.

With an additional $ 300 a week, according to an estimate by University of Chicago economist Peter Ganong, about 42% of workers are paid as much or more than these lost wages.

The April job report sparked speculation that the wage increase resulted in workers staying at home. The U.S. economy hired 278,000 new employees in April, about a quarter of what economists expected.

Attitudes rebounded in May as companies added 559,000 jobs.

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However, some believe that the pandemic-era unemployment programs that have been in place since the CARES law was passed in March 2020 are still hampering job creation. There are still 7.6 million fewer jobs than before the pandemic.

When you factor in other aspects of the social safety net – like subsidies under the Affordable Care Act and an increased $ 3,000 child tax credit per child – all but two states pay a wage of at least $ 15 an hour on Unleash Prosperity, according to the committee economists , a right-wing think tank.

(Of course, Americans will not receive monthly payments of the increased child tax credit until July 15. The analysis also assumes that both parents are on unemployment benefit and have two children.)

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“The work problem today is too few workers, not too few jobs,” said economists Stephen Moore, EJ Antoni and Casey Mulligan – who served as the chief economist on former President Donald Trump’s Council of Economic Advisers.

However, others believe that unemployment benefits do not marginalize workers to a large extent.

Many may find it too risky to take a personal job if they haven’t completed their six-week Covid vaccination cycle. Parents may still not be able to return to work if daycare or schools are not yet open. Approximately one in five unemployed people is still on layoff and may be waiting to be recalled to their previous employer.

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According to the Ministry of Labor, there is currently about one unemployed person for every vacancy. However, it is unrealistic to believe that vacancies will be filled immediately or that all unemployed are qualified or physically able to do the job on offer, said Stettner.

“Anyone who applies for a job knows that you won’t get it right away,” he said. “It’s not that you can come in and get a job in a day. It’s going to take time.”

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