A court blocked Maryland’s Republican Gov. Larry Hogan from prematurely cutting off federal unemployment benefits for tens of thousands of Marylanders Tuesday — a win for the state’s unemployed as Republican-led states across the country continue to yank the benefits Congress put in place during the COVID-19 pandemic.
Baltimore City Circuit Judge Lawrence Fletcher-Hill issued a preliminary injunction, prohibiting Hogan and his administration from taking any action that would prevent Maryland residents from accessing the full benefits afforded through the CARES Act and the American Rescue Plan, the $2 trillion COVID-19 relief package Biden signed into law in March.
The order comes after a pair of unemployed Marylanders issued lawsuits against the governor for attempting to end benefits in early July. Trials have not been set for those cases, but this guarantees the benefits will be in place at least through mid-August.
The American Rescue Plan extended a $300 weekly unemployment insurance supplement, as well as benefits for those who have been unemployed long-term or do not typically qualify for state benefits, through early September.
Without those benefits, unemployed Americans will have to rely solely on state-funded unemployment insurance, which lasts 26 weeks or less, and doesn’t cover a major part of the workforce.
Hogan was among a long list of Republican governors who said they would cut off federal unemployment benefits early. Republicans and business owners have been complaining for months that the increased unemployment benefits are disincentivizing people from coming back to work, creating a labor shortage.
“We have a critical problem where businesses across our state are trying to hire more people, but many are facing severe worker shortages,” Hogan said in a statement in June, announcing his decision to cut off benefits. “We look forward to getting more Marylanders back to work.”
Recent jobs reports have done little to reflect a widespread workforce shortage — businesses hired 850,000 workers in June, with the largest gains in the restaurant and service industries.
The Biden administration has largely accepted Republican-led states’ decision to buck their signature policies around unemployment. But this week Biden’s Labor Department issued new guidance to help states start the benefits back up in the event a judge hands down a ruling like the one in Maryland.
The guidance makes clear that any state “may reinstitute participation in any or all programs it previously indicated it would be terminating,” by signing a new deal with the Labor Department. These states could backdate the benefits for self-employed workers who lost them through the Pandemic Unemployment Assistance program, but the same couldn’t be done for the weekly $300 federal payment that had been added to workers’ payments.
In many cases, there would be a lapse before workers started receiving benefits again.
The Biden administration has not seemed eager to fight states who’ve moved to cut off the benefits, even though many economists have said the benefits are probably not playing a leading role in employers’ struggles to find workers. But the guidance this week from the Labor Department could nudge those states to restart their benefits, especially after Indiana refused to do so in early July despite a court order, saying it no longer had a contract with the federal government.
Some senators have called for more aggressive action from the administration to uphold the benefits. Sen. Bernie Sanders (I-Vt.) called for the Biden administration to take direct legal action against states cutting off federal programs, specifically the Pandemic Unemployment Assistance (PUA) program, which covers workers, like gig economy workers, who don’t traditionally qualify for state-run benefits. That has not been the Biden administration’s priority, however.