Plan to Reduce Jobless Benefits Spreads to 16 States

on May16
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With new claims for unemployment benefits inching down, a growing number of Republican governors around the country have announced that they are withdrawing from an array of federal pandemic-related jobless benefits.

The moves, scheduled for June and July, will affect roughly two million people in 16 states, according to a calculation by Oxford Economics, a forecasting and analysis firm. Of those workers, 1.4 million currently on unemployment would lose benefits altogether, it said.

The programs being abandoned include a weekly $300 federal supplement to regular benefits; Pandemic Unemployment Assistance, which covers freelancers, part-timers and others not eligible for state aid; and extended federal benefits for workers who have exhausted their regular allotment of unemployment insurance.

After more than a year of being whipsawed by the pandemic, the economy has been showing new life. Restrictions are lifting, businesses are reopening and job listings are on the upswing. “Over all, jobless claims are about three times as high as they were pre-Covid, but they’re coming down” said Heidi Shierholz, senior economist at the left-leaning Economic Policy Institute.

The governors of Montana and Arizona have said they will give newly hired workers a bonus.

Economists are skeptical that supplemental jobless benefits are playing anything more than a bit part in the pace of the job market’s recovery.

“There is tremendous churn in this labor market,” said Gregory Daco, chief U.S. economist at Oxford Economics. “There are still major supply constraints and unemployment benefits are not the most important one. The virus is.”

Many workers have children at home who are not attending school in person. Others are wary of returning to jobs that require face-to-face encounters. Covid-19 infections have decreased since September, but there are still 38,000 new cases and 600 Covid-related deaths being reported each day. Less than half the population is fully vaccinated.

There is halting progress from employers as well, as businesses continually update their assessments of costs and customer demand. “The hiring pattern isn’t going to be smooth,” Mr. Daco said. “Businesses hire and then reassess. They need to find the right balance. It’s a trial-and-error process more than anything.”

Prematurely halting federal jobless benefits is “detrimental to the economy,” Mr. Daco said. “You’re voluntarily hurting certain vulnerable tranches of the population.”

Mississippi, Tennessee, Arizona and Alabama are among the states that offer the lowest maximum benefit to qualified individuals — $275 or less each week. Nationwide, the average weekly benefit without federal supplements is $387, according to the Center for Budget and Policy Priorities.

As for people who are just starting to apply for unemployment insurance, the Labor Department reported Thursday that 487,000 workers filed first-time claims for state benefits last week, a decrease from 514,000 the week before. In addition, about 104,000 new claims were filed for Pandemic Unemployment Assistance.

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