Unemployment is falling rapidly in states where pandemic aid has been cut. A total of 22 states, most of the run by Republican governors, have turned down more pandemic unemployment aid, and those states are watching people rapidly get back to work. Meanwhile, most Democratic governors are clinging to the aid payments, and slowing down their own states’ recoveries. The Wall Street Journal reports:
The number of unemployment-benefit recipients is falling at a faster rate in Missouri and 21 other states canceling enhanced and extended payments this month, suggesting that ending the aid could push more people to take jobs.
Federal pandemic aid bills boosted unemployment payments by $300 a person each week and extended those payments for as long as 18 months, well longer than the typical 26 weeks or less. The benefits are set to expire in early September, but states can opt out before then.
Missouri Gov. Mike Parson said the benefits were helpful during the height of the pandemic, but their continuation has “worsened the workforce issues we are facing.”
He, like many other Republican governors, moved to end the federally funded benefits to address businesses’ concerns about a labor shortage. The state’s unemployment rate was 4.2% in May, well below the national average of 5.8%, according to the U.S. Labor Department.
Missouri cut off payments as of June 12, joining three other states as the first to do so. Seven states followed with an end on June 19, and this weekend, benefits are expiring in 10 more states. Four more states will curtail benefits by July 10.
The number of workers paid benefits through regular state programs fell 13.8% by the week ended June 12 from mid-May—when many governors announced changes—in states saying that benefits would end in June, according to an analysis by Jefferies LLC economists. That compares with a 10% decline in states ending benefits in July, and a 5.7% decrease in states ending benefits in September. Workers on state programs would lose the $300 weekly federal enhancement but could continuing receiving the state benefits.
Jefferies also found somewhat larger decreases in the number of people receiving benefits through pandemic programs in states curtailing benefits, though the data lags behind by an additional week. In many cases, those recipients will be cut off entirely when their state ends participation in the federal programs.
“You’re starting to see a response to these programs ending,” said Aneta Markowska, Jefferies’ chief financial economist. In recent months “employers were having to compete with the government handing out money, and that makes it very hard to attract workers.”
Sen. Ron Johnson of Wisconsin recently lamented the inability of employers to find labor. He told Fox News:
Well, first of all, he [President Trump] was spot on regarding how destructive President Biden’s policies are toward our economy.What President Biden is going to notice here in Wisconsin is there’s not a business in Wisconsin that can hire enough workers.
But, you know, the other thing is the federal unemployment benefits… are keeping workers on the sidelines. And it’s a huge problem here in Wisconsin. It’s going to really stifle our economic recovery as well. So hopefully he’ll listen to employers here in Wisconsin. He’ll get an earful.
Watch Johnson’s appearance below.
