On June 12, unemployed workers in Alaska, Iowa, Missouri and Mississippi will see their pandemic unemployment benefits shut off three months early, the first of 25 Republican-led states to slash federal benefits that would ordinarily expire in September.
It’s the beginning of a bold, mass, social and economic experiment to see if turning off federal unemployment benefits early for half the country will prod people in those states back to work.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020 provided a $300 weekly federal supplement on top of regular state unemployment benefits. The American Rescue Plan extended them through Labor Day.
The Century Foundation, a progressive think tank, estimates that 4 million people will lose benefits, for a total of $22 billion.
Economists and researchers say the move will only nudge a small amount of people back into the workforce, and will not outweigh the precariousness for workers relying on benefits for basic needs and who are staying home for other reasons, like virus concerns and caregiving for elderly relatives or children.
But the other GOP-led 21 states are forging ahead, turning off their federal benefits through July 19 to heed business complaints that employers can’t find enough workers to serve tables, make beds, and man factory equipment. They say the government is paying people more not to work than they could afford to pay them to work, and they can’t compete.
“While these federal programs provided important temporary relief, vaccines and jobs are now in good supply. And we have a critical problem where businesses across our state are trying to hire more people, but many are facing severe worker shortages,” Maryland Gov. Larry Hogan said in a statement June 1 as his state became the 25th to end the federal benefits. “We look forward to getting more Marylanders back to work,” he said.
Combined federal and state unemployment benefits equal an average of about $650 a week, or around $16 an hour for full-time work. That’s more than some entry-level jobs are offering. Some of the open jobs are also only part-time, which means the weekly pay is even less than what the government is offering.
Underlying health conditions are one of the reasons some workers cite for staying home.
Jordan Motteler, 30, of Oklahoma, was a shuttle driver and her husband worked at Lowe’s home improvement store. Both were laid off in March 2020. Because she and her daughter are immuno-compromised and the vaccines are not approved by the Food and Drug Administration, she says her doctor has said she can’t get the vaccine yet. Her health conditions would put her at the risk of cardiac or respiratory failure if she returned to work and caught Covid.
“I love my job,” Motteler said. “I hate that I can’t work.”
Without the federal benefit, she only qualifies for $189 a week in state unemployment compensation, she said. Paying for medicine, bills, and groceries, including her daughter’s formula — the price of which doubled during the pandemic — is only going to get harder.
“How do you figure $189 is more than enough to cover groceries and bills for a family of five? And now they want to cut it off?” Motteler said. “I just don’t understand how the numbers are still rising over the Covid pandemic but now we’re being left to essentially fend for ourselves.”
Oklahoma will cut off her family’s federal benefits on June 26.
Other workers say finding and paying for child care is part of what is keeping them from rejoining the workforce. Even with the benefits cut off, the math just doesn’t add up.
Sherry Pratt of New Hampshire is a 47-year-old unemployed print marketing sales representative.
She and her husband have been living on his warehouse worker salary. But her daughter has special needs and the cost of a specialized after-school caregiver, if she could even find one, would eat up most of any potential earnings. Her state will cut off the federal expanded benefits on June 19.
“I don’t think there’s a labor shortage, I think there’s a living wage labor shortage,” Pratt said.
According to a paper from the Federal Reserve Bank of San Francisco published this month, if there were just 28 unemployed people, six workers a month would find a job. Take away the benefits and seven workers would.
“What happens to the other 21 workers? They need something to get by on to pay their bills, to put gas in their car, so they can look for a job,” said Andrew Stettner, a senior fellow at the Century Foundation. “These governors are essentially cutting off their nose to spite their face.”
Labor demand is soaring but workers are hanging back. There are 9.3 million unemployed workers and at least that many jobs open. In a sign of worker confidence, Americans quit their jobs at record levels in April, hitting 4 million.
Some labor market observers say employees are going back to jobs they realize they don’t want any more, then leaving for better ones. Others argue that the extended benefits are making it easier, too easy, for workers to take their time.
Workers say an essential lifeline is getting cut.
“I have felt like I haven’t had control of much. And now it’s just like the bottom is falling out even more,” Pratt said.