More than 1.9 million Americans in Alabama, Mississippi and 14 other Republican-led states are set to have their unemployment checks slashed starting in June, as GOP governors seek to restrict jobless assistance in an effort to force more people to return to work.
Indiana is not among them, although Gov. Eric Holcomb has said his administration is reviewing whether to make similar changes.
The cuts are likely to fall hardest on roughly 1.4 million people who benefit from stimulus programs that Congress adopted at the height of the coronavirus pandemic, including one targeting those who either are self-employed or work on behalf of gig-economy companies such as Uber. Beginning next month, many of these workers are likely to receive no aid at all.
The looming cliff reflects an emerging campaign on the part of GOP leaders to combat what they consider a national worker shortage. Arizona and Ohio became the latest states on Thursday to announce plans to scale back benefits out of a belief that the generous federal payments parceled out over the past year have deterred people from returning to their old positions now that the public-health crisis is waning.
The reality is more complicated, labor experts say. The slowdown in hiring may instead reflect workers’ concern about their safety and difficulty obtaining child care, or their trouble finding suitable positions in hard-hit industries such as tourism on top of mounting frustration about wages they consider too low. That means the loss of unemployment benefits over the next month threatens to inflict new financial harm on those who say they’re already struggling.
At least 16 GOP-led states have announced plans to cut benefits: Alabama, Arkansas, Arizona, Georgia, Idaho, Iowa, Montana, Mississippi, Missouri, North Dakota, Ohio, South Carolina, South Dakota, Tennessee, Utah and Wyoming.
Starting next month, more than 557,000 unemployed people in these states are expected to have their payments decrease by $300 each week, according to a Washington Post analysis of federal claims data released Thursday. Millions of Americans have received the extra allotment as a result of a federal stimulus program Congress passed earlier this year. In these 16 GOP-led states, however, out-of-work residents soon will be able to collect only as much as their unemployment insurance programs allowed before the pandemic, which in some parts of the country is well below poverty-level wages.
For a second group of about 863,000 workers, their governors’ cuts mean they stand to lose all of their benefits outright. This includes out-of-work Uber drivers and others who are self employed. These workers had obtained aid for the first time under a second stimulus initiative, known as Pandemic Unemployment Assistance (PUA), but their states are ending participation in the effort.
A final group of about 513,000 workers who collect traditional unemployment benefits each week similarly may have their assistance reduced to zero. These Americans rely on a federal program that pays them extra weeks of jobless support even if they have exhausted their states’ annual allotments. Republican governors are cutting their participation in this effort as well, leaving workers who have been unemployed for prolonged periods with potentially no more options to obtain aid.
Holcomb this week signed an order that will reinstate a requirement that those applying to collect unemployment benefits actively seek jobs and be available for work—a requirement the state has waived since the beginning of the pandemic. The change will take effect June 1.
Holcomb said previously that he was directing the Indiana Department of Workforce Development for a demographic analysis of unemployed residents while he considered whether to withdraw Indiana from the $300-a-week supplemental federal payment on top of state benefits. The maximum state payment is $390 a week.
For unemployed workers such as Stephanie Pannell, a 53-year-old single mother in Harrison, Arkansas, the Republicans’ efforts threatened to deliver another massive financial blow in what already has been a grueling year. The pandemic aid has been a financial lifeline for her and her 14-year-old son, providing $419 a week after taxes—just enough to cover her $700 rent and take care of other living expenses but little else.
On Friday, though, Arkansas Gov. Asa Hutchinson announced that the state plans to cut recipients off the program at the end of June. “For us to lose this is going to be catastrophic, because this is how we’ve made it,” said Pannell, who receives money through the PUA program. “People are like, ‘You don’t want to work.’ Are you crazy? I want to work because I can make a lot more than this pittance. But because of my son’s health, I cannot risk it. … They’re acting like they’re giving us gold bullion.”
More governors are expected to follow the lead of Arkansas and other GOP-governed states, which—combined with a recent decline in Americans newly seeking unemployment—could change the number of Americans affected. On Thursday, the Labor Department said that 473,000 Americans had filed new unemployment insurance claims last week, marking another pandemic low.
The state cuts follow a week after the U.S. government reported slower-than-anticipated hiring in April. Even as the country ramped up its efforts to vaccinate millions of Americans—and states began to lift their business restrictions—the economy added only 266,000 jobs last month.
The dour data prompted Republican lawmakers and lobbying groups including the U.S. Chamber of Commerce to call on Washington to rescind its recent unemployment aid. They took aim at the most recent congressional relief package, the American Rescue Plan, claiming that its heightened weekly payments and other benefits had made it prohibitively difficult for employers to fill their open slots.
The White House has maintained that unemployment aid has not contributed to a worker shortage. But President Joe Biden did appear to extend an early concession to his GOP critics this week, promising to “make it clear” that Americans must take a job if they are offered one that is suitable—or risk losing their benefits. States long have maintained such a policy anyway.
Biden’s public comments ultimately did not assuage congressional Republicans, who held a news conference at the Capitol on Thursday where they called on Congress to adopt legislation that would phase out the stimulus programs before they are set to expire this fall. Sen. Marco Rubio, R-Fla., said he had heard from businesses in his state that say they are struggling to find applicants because jobless benefits are “creating an incentive for people not to return to work.”
“We have a labor crisis in this country,” Rubio said.
With Democrats in control of the House and the Senate, however, the Republicans’ proposal is unlikely to advance. In the meantime, Sen. Mike Braun, R-Ind., on Thursday encouraged states to act in Washington’s place—stressing that they should “pull the plug so that we don’t need to legislate.”
A slew of Republican-led states have started to trim unemployment insurance on their own, announcing in recent days that they will stop participating in a series of federally funded programs that provide aid to residents still out of a job. The expirations are set to occur throughout June and July, months before Congress had intended, as the GOP governors aim to lessen or eliminate families’ weekly payments to catalyze a local hiring burst.
“Alabama is giving the federal government our 30-day notice that it’s time to get back to work,” Gov. Kay Ivey said in a statement announcing her state’s changes this week.
Some of the Republican-led states that plan to reduce benefits actually have few people collecting such aid and lower unemployment rates than the national average. That includes Wyoming, for example, where Gov. Mark Gordon on Wednesday said that plussed-up federal aid is “hindering the pace of our recovery” and contributing to a local worker shortage.
Wyoming’s unemployment rate has remained relatively low in recent months, reaching 5.3%, according to the most recent federal data released last month. Only about 10,000 workers were collecting unemployment aid by mid-April, the Labor Department data show.
Some legal experts think that the Biden administration may be able to continue providing federal benefits despite the GOP’s opposition. The National Employment Law Project (NELP), a worker advocacy legal center and think tank in Washington, wrote a letter to Labor Secretary Marty Walsh on Wednesday outlining some legal options it thinks are feasible to keep federal aid flowing to families in need.
One possibility, the lawyers wrote, is for the Labor Department to require states to continue paying PUA benefits to gig workers and others who are self-employed, arguing that the Cares Act does not allow states to opt out of the program. Without the intervention, NELP advocates warned, people of color and other underrepresented workers would feel a “disparate economic sting,” because they already suffer from higher rates of unemployment.
“We will be stalling the recovery if we cut benefits now, earlier than what Congress intended,” said Nicole Marquez, a director at NELP and one of the authors of the report.
The idea also picked up early traction this week on Capitol Hill, where Senate Finance Committee Chairman Ron Wyden, D-Ore., said the Labor Department “needs to look at all options to keep these workers from losing their income.” On Thursday, Sen. Bernie Sanders, I-Vt., the chairman of the Budget Committee, similarly called on the agency to take action.
“Punishing unemployed workers who lost their jobs during a pandemic through no fault of their own by taking away their unemployment benefits will not improve the economy. It will only make a bad situation even worse,” Sanders said in a statement.
The Labor Department said it was reviewing the letter from NELP.
For some Democrats, the Republican governors’ actions illustrated anew the deficiencies in an unemployment system that allows the states great latitude—sometimes resulting in unsustainable benefits, significant application hiccups and other obstacles to aid. With the economy improving, some party leaders fear that GOP-led states are only just beginning, opening the door for the same sort of massive reductions nationwide that followed the last recession, in 2009.
“This is more of the same in terms of what we saw after the 2009 recession, when you saw states like Florida hollow out [unemployment] benefits, cutting them to the bone,” Wyden said. “This is a far-right Republican governor-led strategy to rip new holes in the safety net.”