Biden backs work requirement for unemployment benefits as labor shortage worries grow

The White House is reinstating work search requirements for unemployment insurance recipients as more states cancel federal benefits over labor shortage concerns.

“They're obviously hearing from employers that are struggling to get workers back to work,” Andrew Stettner, an unemployment insurance expert and senior fellow at the Century Foundation, told Yahoo Money. "And certainly they were feeling some heat from the jobs numbers.”

The move comes as Iowa and Mississippi joined four other states in canceling federally funded unemployment programs early and after employers added just 266,000 jobs in April, well below the 1 million economists expected. Additionally, job openings reached a record-high in March, rising by 8%, while hires only rose 3.7% for the same period, according to new data by the Labor Department.

While the White House has rejected claims that the more generous unemployment benefits are keeping people out of the workforce, the president directed the Labor Secretary on Monday to help put work search criteria in place in the 21 states that don’t currently have those requirements.

“We're going to make it clear that anyone collecting unemployment who is offered a suitable job must take the job or lose their unemployment benefits,” President Joe Biden said at a press conference on Monday.

Work search criteria vary depending on the states, but usually unemployed Americans have to apply for one to five jobs. Some states require benefits recipients to submit weekly or monthly work search logs detailing their effort to apply for jobs.

“I don't think it's going to be something that will necessarily keep states in the unemployment program,” Stettner said. “Some of the states that are backing out now are joining it from an ideological view and it has a certain momentum to it.”

‘Unacceptable for states to abruptly end their participation'

Montana and South Carolina were the first states to announce plans to cancel benefits early last week, with Alabama, Arkansas, Mississippi, and Iowa — all led by Republican governors — making similar moves after Friday’s job report.

“Federal pandemic-related unemployment benefit programs initially provided displaced Iowans with crucial assistance when the pandemic began,” Iowa Gov. Kim Reynolds said in a statement on Tuesday. “But now that our businesses and schools have reopened, these payments are discouraging people from returning to work.”

Starting in mid or late June, jobless workers in those six states will lose the extra $300 in weekly unemployment benefits, but maintain their regular benefits. Contractors, gig workers, and others will also lose access to the Pandemic Unemployment Assistance (PUA) program, meaning those workers won’t get any benefits. Those programs are set to expire on September 6 nationwide.

“It is unacceptable for states to abruptly end their participation in the fully federally funded pandemic unemployment insurance programs that workers and their allies fought for,” Nicole Marquez, director of Social insurance at the National Employment Law Project, told Yahoo Money. “Cutting off this lifeline unfairly burdens unemployed people of color, whose communities in this crisis and historically, have felt the brunt of inequitable UI policies.”

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Workers in Iowa and Mississippi could lose up to $4,640 and $3,960, respectively, in cumulative benefits after the programs expire on June 12. Workers on PUA and PEUC would lose at least $3,810 in Arkansas, at least $4,500 in benefits in Montana, and at least $3,420 in South Carolina because they would no longer qualify for the base unemployment benefit.

Montana is the only state of the six to offer a one-time return-to-work payment of $1,200, using money from the American Rescue Plan to fund the program. Only those who complete four weeks of work would receive the payment.

“Even though these states have benefited from unemployment benefits, they've benefited from strong economic growth that's [also] been assisted by the stimulus payments,” Stettner said. “Now they're just taking this piece [out] and they're turning on their own population.”

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

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