Nearly 1 million workers will lose at least some benefits in the dozen states that will prematurely stop participating in federal unemployment programs.
Republican governors in 12 states have announced in the past week they will cancel the federal benefits, including an extra $300 per week and benefits for contractors, in an attempt to make workers more willing to accept lower wages.
Starting next month, 895,000 workers in those dozen states will lose benefits, according to an analysis by The Century Foundation, a think tank that advocates for more worker support. Of those, 621,000 will be left with no unemployment income at all, while the rest could continue to receive state-funded benefits.
“There is simply no economic evidence that pandemic unemployment aid is holding back job creation,” Andrew Stettner, a senior fellow at The Century Foundation, said in a release.
More Republican states are likely to make similar announcements. If every state with a Republican governor canceled the benefits, some 4.8 million workers would be affected.
The benefits will soon expire anyway, since Congress has put them in place only until early September. Stettner also pointed out that workers have been returning to jobs of their own accord, as the total number of claims in the main federal programs are down 16% since March.
Republicans and business owners have said the extra $300 makes unemployed people unwilling to take jobs that don’t pay more than the combination of $300 and regular state benefits, which average $387 per week nationally. (Republicans and businesses also have complained that workers won’t accept jobs even when no federal unemployment benefits are in place.)
But the decision to cancel benefits could have negative economic consequences for states. The federal benefits that won’t be paid amount to $4.6 billion in the 12 states that have announced cuts so far. In its analysis of how the cut could affect the state, South Carolina’s Department of Employment and Workforce estimated “the maximum amount of expected losses in federal funding to the state would be between $600 and $650 million,” partially offset by as much as $372 million in wages under an optimistic projection of workers returning to jobs.
As Stettner put it: “Money from federal benefits flows into local businesses through additional consumer spending, generating $1.61 in economic activity for every dollar spent.”
The U.S. Labor Department should require states to keep the Pandemic Unemployment Assistance program for gig workers, Sen. Bernie Sanders (I-Vt.) said Thursday in a letter to Labor Secretary Marty Walsh.
The letter says Walsh is “obligated to ensure this aid gets to workers” and that he should “commit to holding states accountable for their role in administering PUA benefits.”
The PUA program, created last year at the outset of the pandemic, currently benefits more than 6 million workers who are ineligible for regular unemployment because they hadn’t been laid off from traditional payroll jobs.
States shouldn’t punish workers by canceling their benefits, Sanders said in a statement.
“There is not a shortage of willing workers in America,” he said. “There is a shortage of employers willing to pay workers a living wage with decent benefits.”