21 states now canceling federal unemployment benefits

Indiana, Oklahoma, and Texas are the latest states to join the wave of others opting out of pandemic-era unemployment programs next month that will slash benefits for 3.6 million workers.

"It's incredibly disappointing that even in states with high unemployment rates like Texas, Republican Governors are putting ideology over the needs of their workers," Andrew Stettner, an unemployment insurance expert and senior fellow at the Century Foundation, told Yahoo Money. "For the first time in the pandemic, unemployed workers will largely not be able to find a source for help as they struggle to find a job."

Workers in those 21 states stand to collectively lose $21.3 billion, averaging out to potentially thousands of dollars per worker, according to an analysis by the Century Foundation. That's money that also won’t flow into those states’ economies.

The move to cancel federal programs gained steam among Republican governors following April's disappointing jobs report. House Republicans including House Republican Leader Kevin McCarthy (R-CA) urged all GOP governors to opt out of the federal programs in a letter on Friday.


"The Texas economy is thriving and employers are hiring in communities throughout the state," Texas Governor Greg Abbott said in a statement on Thursday. "The amount of job openings in Texas is far greater than the number of Texans looking for employment, making these unemployment benefits no longer necessary."

In March, Texas's unemployment rate was 6.9% down from its pandemic peak of 12.9% but higher than its pre-pandemic level of 3.7%. Workers in Texas will lose at least $3,000 in additional unemployment benefits while workers reliant on other federal programs will lose from $3,700 to $8,350 in benefits. The move will leave 1.3 million workers with limited or no benefits.

‘The ones that will have the hardest time finding a job’

Starting in mid- or late-June, jobless workers in those 21 states will lose the extra $300 in weekly unemployment benefits but maintain their regular benefits. Contractors, gig workers, and others will lose access to the Pandemic Unemployment Assistance (PUA) program, meaning they won’t get any benefits at all.

Those programs are set to expire on September 6 nationwide.

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The cut-off in benefits will disproportionately hurt people of color in many states, according to Stettner. Two-thirds of unemployment insurance recipients in Mississippi are Black, while around half in South Carolina and Alabama are Black. The percentage of Black Americans relying on unemployment in those three states is at least three times higher than the national average of 18%.

"We know in the southern states, people of color — Black workers in particular — are the majority of people on benefits," Stettner said. "They're the ones that will have the hardest time finding a job because of discrimination and also they're the ones who were hit by COVID the hardest."

LOS ANGELES, CALIFORNIA - APRIL 22: A man wearing a mask walks past a
A man wearing a mask walks past a "now hiring" sign on Melrose Avenue amid the coronavirus pandemic on April 22, 2021 in Los Angeles, California. (Photo by Alexi Rosenfeld/Getty Images) (Alexi Rosenfeld via Getty Images)

‘Get off the sidelines and into the workforce

Arizona, Montana, and Oklahoma are the only states so far of the 21 to offer a one-time return-to-work payment of $2,000, $1,200, and $1,200 respectively, using money from the American Rescue Plan.

In Montana, only those who complete four weeks of work would get the payment, while Arizonians must complete at least 10 weeks at their new job. In Oklahoma, workers have to complete six weeks of work to get the bonus.

"Since our state has been open for business since last June, the biggest challenge facing Oklahoma businesses today is not reopening, it’s finding employees," Governor Kevin Stitt said in a statement on Thursday. "For Oklahoma to become a Top Ten state, workforce participation must be at a top level and I am committed to doing what I can to help Oklahomans get off the sidelines and into the workforce."

Lawmakers, including Sens. Ron Wyden (D-OR) and Bernie Sanders (I-VT), are urging the labor secretary to find a way to pay benefits to PUA recipients, with Sanders noting that it's a “congressionally-mandated requirement,” in a letter on Thursday.

"I urge you to commit to holding states accountable for their role in administering PUA benefits," Sanders wrote. "Workers who lack access to childcare, have lost employer-sponsored health insurance, and fear for their health and safety as we work to get every American vaccinated are entitled to these benefits."

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Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova

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