Labor secretary doubles down on federal unemployment benefits as labor shortage rages

Labor Secretary Marty Walsh on Wednesday defended a federal unemployment program that's become a lightning rod for Republican criticism amid growing concerns of a labor shortage. 

Testifying before the House Education and Labor Committee, Walsh stood by the $300-a-week supplement included in the coronavirus relief package that Democrats passed earlier this year. Although the program is not slated to expire until Sept. 6, 2021, 25 GOP-led states have recently announced plans to prematurely cut off the extra aid, a move they contend will help businesses struggling to hire employees.

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Walsh pushed back against that assessment: Pressed by Rep. Virginia Foxx, the ranking Republican committee member, about the "damaging unemployment insurance scheme" that's created an "incentive for Americans to stay home," Walsh argued that lackluster job growth was actually due to fears of contracting COVID-19 and a lack of child care. 

"I do not feel that the $300 bonus is keeping people out of work," he said, later adding: "If there are reasons people aren't going back to work, it's lack of childcare, it's school still being hybrid, it's people who haven't been vaccinated, people are taking care of their loved ones."

His testimony comes on the heels of the May jobs report, which revealed that employers added 559,000 jobs last month, missing Wall Street's expectations for a gain of about 650,000. It marked the second consecutive miss for job creation: In April, the economy added a revised 278,000 jobs, much smaller than the 1 million forecast by Refinitiv economists.

THESE 25 STATES ARE ENDING $300 UNEMPLOYMENT BENEFITS - HERE'S WHEN

There remain 7.6 million fewer jobs than in February 2020, before the pandemic began.

The lackluster payroll growth has ignited concerns about a labor shortage and its potential impact on the economy's tepid rebound from the pandemic. Employers are struggling to fill available positions – in April, there were a record 9.3 million open jobs – forcing them to reduce hours, pay overtime and raise prices. 

"The incentive is such that more workers are staying home rather than getting back to work," said Rep. Elise Stefanik, R-N.Y. "And you go to Main Street across America and there's a for-hire sign for small businesses. Why are we continuing to promote this incentive for workers to stay home rather than getting back to work?"

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.) About 40% of unemployment recipients are receiving more money from the government than they earned at their previous job, the Republican lawmakers said.

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President Biden and Democrats have rejected the notion that Americans are choosing to stay home and collect the extra unemployment benefits – part of the $1.9 trillion coronavirus relief law passed in March – rather than returning to work. 

Still, Biden has emphasized that the unemployment benefits will end in September as planned, despite momentum among some of his party's members to make the extra money permanent. 

"It’s going to expire in 90 days," Biden said on Friday. "That makes sense."