Red states are slashing federal unemployment benefits as Republicans and businesses complain of a “worker shortage” in the economic recovery from the coronavirus pandemic.
More Republican-led states may soon join Montana and South Carolina in cutting off the extra $300 and benefits for gig workers that Congress put in place amid unprecedented layoffs stemming from social distancing measures that have forced businesses to close or operate at reduced capacity.
South Carolina Gov. Henry McMaster (R) called the extra benefits a “dangerous federal entitlement, incentivizing and paying workers to stay at home rather than encouraging them to return to the workplace.”
Republicans have always said jobless pay discourages work, and businesses always complain they can’t find enough workers willing to accept their wages, but the complaints have been supercharged by the unprecedented federal support ― Congress has never added hundreds of dollars to weekly benefits before ― and the rush to reopen businesses as vaccines spur a return to normalcy.
GOP lawmakers blamed the added benefits for a disappointing jobs report Friday that showed employers added only 266,000 jobs in April, far fewer than economists predicted, with the jobless rate ticking up to 6.1%.
“While there are certainly people that needed access to increased unemployment benefits during the heart of this pandemic, we should not be in the business of creating lucrative government dependency that makes it more beneficial to stay unemployed rather than return to work,” Sen. Roger Marshall (R-Kan.) said in a statement on Friday, accusing the Biden administration of causing a “government imposed labor shortage.”
Marshall said he planned to introduce legislation next week that would repeal enhanced unemployment benefits nationwide. The federal benefits are already set to expire in early September.
The Senate could be headed for a dramatic clash over unemployment, as Democrats hope to reform the state-federal unemployment system in a way that would probably disallow states from cutting benefits as often as they do.
Sen. Ron Wyden (D-Ore.), chair of the Senate Finance Committee, said it’s “deeply disturbing” what Republican states are doing.
“Enhanced jobless benefits helped save the economy by ensuring millions of families could pay rent and buy groceries during this crisis,” Wyden said. “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.”
Georgia labor officials have been debating such a move for weeks, Georgia Commissioner of Labor Mark Butler told HuffPost on Friday. “It’s being seriously considered,” he said.
Officials in Wyoming told Politico on Friday they were also considering an early end to federal benefits.
But April’s jobs report was not actually a slam dunk for benefits-haters. It showed more than 300,000 job gains in the leisure and hospitality industry and more than 400,000 workers returning to the labor force last month. In other words, people are returning to work and restaurants are hiring in a big way, despite their complaints.
“It may be that so many employers are re-opening so quickly, that it will take a few months to fill open positions, but this is a temporary problem not an endemic one,” Mark Zandi, chief economist at Moody’s Analytics, said in an email.
“The disappointing April jobs numbers was due to weakness in industries that we know are or will continue to be very strong, such as construction, couriers, vehicle manufacturing, employment agencies, and educational services,” Zandi said, adding that he expected big job gains in the coming months.
President Joe Biden, meanwhile, called Friday’s jobs report a “rebuttal” to those who say unemployment benefits are keeping Americans from returning to work. He said the real issue was simply that millions of jobs had been wiped out by the coronavirus pandemic.
“I know some employers are having trouble filling jobs ... the economy still has 8 million fewer jobs than when this pandemic started. More workers are looking for jobs and many can’t find them. The virus stole jobs,” Biden said in remarks on the economy at the White House.
Asked if he saw a connection between unemployment benefits and slow job growth, Biden said, “No, nothing measurable.”
Republicans said that when Congress added $600 to unemployment benefits last year, it would crush hiring. Instead, hiring surged and the unemployment rate plummeted from its shocking high of 14.8% last April.
Nevertheless, the war over added unemployment benefits is likely to escalate in the coming weeks. The U.S. Chamber of Commerce, an influential lobbying group on Capitol Hill, especially among Republicans, signaled it planned to push lawmakers to end the jobless assistance.
“The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market,” Neil Bradley, the group’s chief policy officer, said in a statement. “We need a comprehensive approach to dealing with our workforce issues and the very real threat unfilled positions poses to our economic recovery from the pandemic. One step policymakers should take now is ending the $300 weekly supplemental unemployment benefit.”