Unemployment: Which states have called to cancel all additional federal benefits?

Over the last few weeks, following the lead of Montana and South Carolina, twenty-one states have announced that they will be ending the additional benefits for unemployed workers this June and July. The announcement includes the extra 300 dollars on top of whatever a claimant receives from their state’s unemployment systems.

Republican governors lead all states that have called to end the additional benefit, which includes: Alabama, Alaska, Arkansas, Arizona, Georgia, Idaho, Indiana, Iowa, Mississippi, Missouri, Montana, North Dakota, Ohio, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia, and Wyoming.

Many have used common Republican talking points about fears that the benefits incentivize workers to depend on the social safety net to justify their decision. When Idaho Governor Brad Little announced that he would be using his power to end the extra benefits, he cited that the decision “based on a fundamental conservative principle — we do not want people on unemployment. We want people working.”

The pandemic has created a unique economic situation. Many experts are waiting for more data to explain the economic phenomenon we are currently seeing. Earlier this month, many were surprised to see how few jobs were added to the economy -- 266,000 -- after organizations like Dow Jones had projected that the economy could add more than one million. Some governors have used this slow growth in the job market as a rationale to stop the additional unemployment benefits in their state.

However, some economists fear that pulling the rug out from millions on unemployment could slow the recovery if unemployed workers cannot reenter the job market quickly, leading their incomes to plummet and causing the economy to contract as spending decreases. Other monetary policy experts fear that the government has pumped too much stimulus into the economy. This position helps to bolster the case of many Republicans who have called for an end to the additional benefits. Some of these experts fear that all of the stimuli could lead to an inflation crisis, wherein the federal reserve would have to step in. The Fed could combat inflation by increasing interest rates to stall the economy and allow it to find an equilibrium where an inflation crisis can be avoided. The issue with this move is that it can have punitive impacts on some of the most economically vulnerable people.

Similarly, if states cancel additional benefits but do not provide additional support for working parents, families could find themselves in a precarious financial situation. Many schools and child care facilities around the country are not operating at full capacity. If parents have nowhere to send their children or cannot afford child care, they may postpone their reentry into the workforce and, in the end, become more reliant on government assistance to pay their rent and keep food on the table.

Further complicating the picture is that various situations could be happening simultaneously between states. The right decision is for one state may not be the wisest for others. However, until more data is collected, experts and policymakers will have difficulty telling which situation each state and cities find themselves in.

Governments should proceed with caution and ensure that they are incentivizing reentry in a way that assists workers in overcoming barriers that may be keeping them on unemployment. For example, in Arizona, Gov. Doug Ducey announced that the state would use funds from the American Rescue Plan to increase access to child care. Workers who reenter the workforce in Arizona who make under $25 an hour will be eligible to receive “three months of child care assistance.”

Which states are offering return-to-work bonuses?

Three states -- Arizona, Montana, and Oklahoma -- are providing one-time payments to workers who reenter the workforce. The payments range in value from $1,200 to $2,000 and will be paid using funds passed through the American Rescue Plan. Montana was the first state to announce such a program and will provide eligible workers with a $1,200 check after completing four weeks of work in their new job.

Arizona

When Gov. Ducey announced his state would stop accepting funds from the Federal Pandemic Unemployment Compensation program, he cited challenges faced by the private sector in hiring staff now that more businesses are opened. To incentivize workers to begin applying to jobs, the state will provide a one-time payment of $2,000. To claim the bonus, unemployed workers must accept and keep a job for at least ten weeks where they make under $25 an hour (or $52,000 annually). Workers have until 6 September 2021 -- Labor Day -- to find work and qualify for the program.

The state is also allocating funds for job training for workers to “upskill their careers with adult education programs.” Using funds from the American Rescue Act, Arizona will allocate “$7.5 million for community college scholarships for currently unemployed workers who are eligible for the Return-to-Work bonuses — as well as $6 million for GED test preparation and exam fees for eligible workers without a high school diploma.” Arizona has reported an increase in the high school dropout rate, and these programs could help those students get access to better-paying jobs that require a high school diploma or GED.

Oklahoma 


Gov. Kevin Stitt announced that the first 20,000 workers who stop making unemployment claims and begin working at least 32 hours a week will receive a stipend worth $1,200. The program is set to begin on June 28. The Associated Press reported that some of the 90,000 benefit recipients are wary of returning to work, especially those with children. Democrats in the state, including Minority Whip Mickey Dollens, have blasted the governor for this move saying, "Rejecting federal unemployment benefits before they expire this September is shortsighted and punitive."

When are states slated to end their benefits?