'We want people working:' 6 more states ditch federal unemployment benefits

·Reporter
·4 min read

Idaho, Missouri, North Dakota, Tennessee, Utah, and Wyoming are the latest to join the growing number of Republican-led states planning to stop some of the federally-funded unemployment benefits amid concerns of a worker shortage.

"Employers are telling me one of the big reasons they cannot recruit and retain some workers is because those employees are receiving more on unemployment than they would while working," Idaho Gov. Brad Little said in a statement on Tuesday. "We want people working. A strong economy cannot exist without workers returning to a job."

Twelve states so far will opt out of the pandemic-era jobless programs. South Carolina was the first state to make the move last week, which has gained steam among Republican governors — and the U.S. Chamber of Commerce — after last week's disappointing jobs report.

In April, employers added just 266,000 jobs — 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 these benefits provided supplementary financial assistance during the height of COVID-19, they were intended to be temporary, and their continuation has instead worsened the workforce issues we are facing," Missouri Governor Mike Parson said in a statement on Tuesday. "It's time that we end these programs that have ultimately incentivized people to stay out of the workforce."

Starting in mid or late June, jobless workers in those 12 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 at all. 

Those programs are set to expire on September 6 nationwide.

Read more: Top 10 tax mistakes — and how to avoid them

"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."

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.

'Take the job or lose their unemployment benefits'

Montana is the only state of the 12 so far 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," Andrew Stettner, an unemployment insurance expert and senior fellow at the Century Foundation, told Yahoo Money. "Now they're just taking this piece [out] and they're turning on their own population."

LARKSPUR, CALIFORNIA - APRIL 02: A pedestrian walks by a now hiring sign at a The Vitamin Shoppe on April 02, 2021 in Larkspur, California. According to a report by the Bureau of Labor Statistics, the U.S. economy added 916,000 jobs in March and the unemployment rate dropped to 6 percent. Leisure and hospitality jobs led the way with 280,000 new jobs followed by restaurants with 176,000 jobs and construction with 110,000 new positions. (Photo by Justin Sullivan/Getty Images)
A pedestrian walks by a now hiring sign at a The Vitamin Shoppe on April 02, 2021 in Larkspur, California. (Photo by Justin Sullivan/Getty Images)

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. "There's been a lot of discussions since Friday’s report that people are being paid to stay home rather than go to work. Well, we don’t see much evidence of that.”

Several papers found that the extra $600 in benefits distributed earlier in the pandemic had limited labor supply effects and likely didn’t disincentivize work, including one by the National Bureau of Economic Research and another by Yale University. The current supplemental benefit is worth half of what those papers reviewed.

Yahoo Money sister site Cashay has a weekly newsletter.
Yahoo Money sister site Cashay has a weekly newsletter.

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

Read more:

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and Reddit.