Plans to reduce jobless benefits spreads to 16 states

With new claims for unemployment benefits inching down, a growing number of Republican governors around the country have announced they are withdrawing from an array of federal pandemic-related jobless benefits.

The moves, scheduled for June and July, will affect roughly 2 million people in 16 states, according to a calculation by Oxford Economics, a forecasting and analysis firm. Of those workers, 1.4 million on unemployment would lose benefits altogether, it said.

The programs being abandoned include a weekly $300 federal supplement to regular benefits; Pandemic Unemployment Assistance, which covers freelancers, part-timers and others not eligible for state aid; and extended federal benefits for workers who have exhausted their regular allotment of unemployment insurance.

After more than a year of being whipsawed by the pandemic, the economy has been showing new life. Restrictions are lifting, businesses are reopening and job listings are on the upswing.

"Overall, jobless claims are about three times as high as they were pre-COVID, but they're coming down," said Heidi Shierholz, senior economist at the left-leaning Economic Policy Institute.

But hiring in April was weaker than expected and the labor market's slow recovery from the staggering losses wreaked by the pandemic is breeding frustration and uncertainty.

Some employers, particularly in the restaurant and hospitality sectors, have complained of having trouble finding workers. The U.S. Chamber of Commerce and many Republican politicians have argued that a temporary $300-a-week federal unemployment supplement has made workers reluctant to return to the job.

States that have announced plans to end pandemic-related unemployment benefits, which are federally funded but administered by states, before the Sept. 6 expiration date are Alabama, Arizona, Arkansas, Georgia, Idaho, Iowa, Mississippi, Missouri, Montana, Ohio, North Dakota, South Carolina, South Dakota, Tennessee, Utah and Wyoming.

"With the nation's lowest unemployment rate at 2.9% and plenty of good-paying jobs available today, it makes sense to transition away from these extra benefits that were never intended to be permanent," Gov. Spencer Cox of Utah said Wednesday.

The governors of Montana and Arizona have said they will give newly hired workers a bonus.

Economists are skeptical that supplemental jobless benefits are playing anything more than a bit part in the pace of the job market's recovery.

"There is tremendous churn in this labor market," said Gregory Daco, chief U.S. economist at Oxford Economics. "There are still major supply constraints and unemployment benefits are not the most important one. The virus is."

Many workers have children at home who are not attending school in person. Others are wary of returning to jobs that require face-to-face encounters. COVID-19 infections have decreased since September, but there are still 38,000 new cases and 600 COVID-related deaths being reported each day. Less than half the population is fully vaccinated.

There is halting progress from employers as well, as businesses continually update their assessment of costs and customer demand. "The hiring pattern isn't going to be smooth," Daco said. "Businesses hire and then reassess. They need to find the right balance; it's a trial-and-error process more than anything."

Prematurely halting federal jobless benefits is "detrimental to the economy," Daco said. "You're voluntarily hurting certain vulnerable tranches of the population."

Mississippi, Tennessee, Arizona and Alabama are among the states that offer the lowest maximum benefit to qualified individuals — $275 or less each week. Nationwide, the average weekly benefit without federal supplements is $387, according to the Center for Budget and Policy Priorities.

As for people who are just starting to apply for unemployment insurance, the Labor Department reported Thursday that 487,000 workers had filed first-time claims for state benefits last week, a decrease from 514,000 the week before. In addition, about 104,000 new claims were filed for Pandemic Unemployment Assistance.

Those figures are not seasonally adjusted. It was the first time since the pandemic's onset that the weekly state total had fallen below 500,000.

There are 8.2 million fewer jobs than in February 2020, and last month the unemployment rate was 6.1%. Of the states that have announced they are pulling out of the pandemic jobless programs, only Arizona and Mississippi had rates higher than the national average in March, the latest month data is available.