More than 400,000 out-of-work Americans are poised to lose their unemployment benefits this weekend as eight states prematurely drop out of a pandemic relief program that boosted jobless aid by $300 a week.
Alabama, Idaho, Indiana, Nebraska, New Hampshire, North Dakota, West Virginia and Wyoming will terminate the extra unemployment benefits on June 19, a move the states' Republican governors contend will help businesses struggling to hire workers. About 440,000 workers will lose their benefits, according to one analysis conducted by the Century Foundation, a left-leaning think tank.
Four states – Alaska, Iowa, Mississippi and Missouri – officially ended the assistance last week, and 14 others are slated to do so later this summer. Just one, Louisiana, is led by a Democratic governor.
Critics argue that other factors, such as a lack of child care, are the reason for lackluster hiring and have said that opting out of the relief program before it's officially slated to end on Sept. 6 will hurt unemployed Americans, leaving them with no income as they search for a new job.
"The reality is that the strength of the jobs market, not the size of unemployment benefits, will determine how fast Americans can return to where they want to be: a job," said Andrew Stettner, a senior fellow at the Century Foundation. "In the meantime, workers should not be forced to rely on unbelievably low unemployment pay."
The cuts will ultimately affect 4 million Americans who are currently receiving benefits, including 2 million who will lose assistance altogether.
The programs were established in March 2020 – and renewed twice by Congress – as the pandemic forced an unprecedented shutdown of the nation's economy, pushing unemployment to the highest level since the Great Depression. In addition to providing an extra $300 a week, the programs provided aid to workers who were not typically eligible and extended state unemployment benefits once they had been exhausted.
The average state unemployment benefit is about $330 per week. With the federal supplement, Americans are receiving about $630 in weekly unemployment benefits. (For comparison's sake, that's about $32,000 annually, or roughly double the nation's minimum wage.)
But as the economy reopens, companies have complained about a lack of available workers. Labor Department data from April and May shows anemic job growth well below economists' expectations. There's some evidence that ending unemployment benefits led to an uptick in job searches; early data published by Indeed shows that job search activity rose by 5% the day each state announced its plan to cut off the sweetened aid.
But the increase was temporary, disappearing by the eighth day after the announcement, Indeed found. By the second week following the announcement, job search activity in the states had returned to its April levels. Some experts say there are other returns for workers' reticence about returning to the labor force, including a lack of child care and continuing fears of contracting COVID-19.
There remain about 7.4 million fewer jobs than there were in February 2020, before the pandemic shut down broad swaths of the nation's economy.
About 14.8 million workers are relying on some form of unemployment benefits as their main source of income, according to the Century Foundation.