Some States End Pandemic Unemployment Benefits

Sixteen States to Opt Out

Nearly 2 million people could lose or receive fewer pandemic unemployment benefits as states across the country pull out of the federal program. At last count, 16 states have chosen to opt-out, including Alabama, Georgia, Iowa, Ohio, Tennessee, and Utah. The unemployment programs expire on September 6 but some states are ending them several months earlier.

The extra unemployment benefits were enacted as part of the CARES Act which passed in March of 2020. With the economy reopening, businesses are having a hard time filling open positions. The states believe rescinding the extra unemployment aid will encourage people to apply.

Extra Payments Could End Soon

States are expected to end their participation in the program as soon as June 12. At that point, unemployed workers will no longer receive the $300 extra in weekly payments. Individuals will still receive state benefits, which is typically half the wages they earned prior to collecting unemployment.

Individuals who are unemployed for a significant period of time, gig workers, freelancers, and the self-employed may lose their benefits entirely. These workers have been collecting unemployment benefits under the federal government’s Pandemic Unemployment Assistance program. Many states are opting out of both programs, though this is not the case for all states. For example, Arizona is opting out of the $300 extra payment only.

Unemployment Benefits Blamed for Labor Shortages

Governors of the states opting out of the benefits say the programs are causing labor shortages. They argue that people are incentivized to stay home and not look for work. Subsequently, businesses are having difficulties hiring people and reopening.

While pandemic unemployment benefits may be keeping some workers at home, economists say the coronavirus is a bigger reason for labor shortages. Less than half of American adults are fully vaccinated and daily infections are still in the tens of thousands. That is causing people to worry about transmitting or catching the virus at work.

It has been a complex year and a half for the labor market. The next several months could also prove challenging for both workers and employers as the country works to regain a sense of normalcy.

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