Given Friday’s disappointing jobs report, which found that 266,000 jobs were added last month compared to most economists’ forecast of 1 million jobs, many lawmakers are pushing to discontinue federal unemployment benefits which they claim will eliminate a growing labor shortage.
President Joe Biden acknowledged that “some employers are having trouble filling jobs,” in his prepared remarks on the jobs report.
But when asked if enhanced unemployment benefits had an effect on keeping some workers from returning to work he said, “No, nothing measurable.”
‘Study after study has shown that enhanced jobless benefits have not prevented workers from returning to their jobs’
— Sen. Ron Wyden (D., Ore.)
Not everyone agrees. The governors of South Carolina and Montana trace labor shortages employers are facing in their states to federal unemployment benefits and are eliminating them in their states.
“At the current time, there are 81,684 open positions in the state of South Carolina. The hotel and food-service industries have employee shortages that threaten their sustainability,” said South Carolina Department of Employment and Workforce director Dan Ellzey.
“While the federal funds supported our unemployed workers during the peak of COVID-19, we fully agree that reemployment is the best recovery plan for South Carolinians and the economic health of the state.”
‘There are 81,684 open positions in the state of South Carolina. The hotel and food service industries have employee shortages that threaten their sustainability’
— South Carolina Department of Employment and Workforce director Dan Ellzey
South Carolina Gov. Henry McMaster, a Republican, directed his state’s labor department to end all federal unemployment programs on Thursday. That includes the extra $300 a week jobless Americans are eligible to receive through September as part of President Joe Biden’s American Rescue Plan stimulus package.
Gig workers, independent contractors and self-employed people wouldn’t receive any benefits. These workers only became eligible for federal unemployment benefits through a CARES Act program known as Pandemic Unemployment Assistance (PUA).
Montana Gov. Greg Gianforte, a Republican, is taking matters one step further.
In addition to ending its participation in the federal unemployment benefits programs, effective June 27, Gianforte said the state “will launch a return-to-work bonus program, utilizing federal funds authorized by the American Rescue Plan Act,” according to a statement released on Tuesday.
The program would pay a one-time bonus of $1,200 to people who get hired who were previously receiving unemployment benefits. A person must have been receiving unemployment benefit insurance as of May 4, accept a new job, and keep that job for a minimum of 4 paid weeks of paid work.
‘Nearly every sector in our economy faces a labor shortage’
— Montana Gov. Greg Gianforte
“Montana is open for business again, but I hear from too many employers throughout our state who can’t find workers. Nearly every sector in our economy faces a labor shortage,” Gianforte said.
“Incentives matter,” he added, “and the vast expansion of federal unemployment benefits is now doing more harm than good.”
The Department of Labor did not immediately respond to MarketWatch’s inquiry into whether or not the state can legally repurpose funds that were set aside for unemployment benefits.
‘Based on the Chamber’s analysis, the $300 benefit results in approximately one in four recipients taking home more in unemployment than they earned working’
— U.S. Chamber of Commerce executive vice president and chief policy officer Neil Bradley
The U.S. Chamber of Commerce, a lobbying group for businesses, agrees with McMaster and Gianforte.
“The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market,” U.S. Chamber of Commerce executive vice president and chief policy officer Neil Bradley said in a statement published on Friday.
“One step policymakers should take now is ending the $300 weekly supplemental unemployment benefit. Based on the Chamber’s analysis, the $300 benefit results in approximately 1 in 4 recipients taking home more in unemployment than they earned working.”
Other things keeping Americans from returning to work
Ben Zipper, an economist at the Economic Policy Institute, a progressive think-tank, tweeted this in response to the U.S. Chamber of Commerce:
A study by the Chicago Federal Reserve from earlier in the pandemic when jobless Americans were receiving $600 extra a week in benefits suggests that “those currently collecting benefits search more than twice as intensely as those who have exhausted their benefits.”
Sen. Ron Wyden (D., Ore.) heads the Senate Finance Committee labeled efforts to cut off enhanced unemployment benefits as “deeply disturbing.”
“Enhanced jobless benefits helped save the economy by ensuring millions of families could pay rent and buy groceries during this crisis,” he said Friday in a statement. “Cutting off all benefits while millions of workers have not yet been able to return to work could cause tremendous financial pain, and sabotage our economic recovery.”
“Study after study has shown that enhanced jobless benefits have not prevented workers from returning to their jobs, and there are other factors at play here, like lack of child care for millions of women, and ongoing concern about the virus.”