Missouri, Tennessee join U.S. states cutting pandemic payments
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[May 12, 2021]
By Ann Saphir
(Reuters) - The governors of Missouri and
Tennessee are joining five other Republican-led states in ending all
federally funded pandemic-related unemployment benefits this summer,
saying the extra money is keeping those out of work from rejoining the
labor force and making it hard for employers to fill jobs.
"While these benefits provided supplementary financial assistance during
the height of COVID-19, they were intended to be temporary, and their
continuation has instead worsened the workforce issues we are facing,"
Missouri Gov. Mike Parson said in announcing the decision on Tuesday.
It's a contention widely shared by businesses and was behind the U.S.
Chamber of Commerce's call Friday to end the aid nationally after a
government report showed employers hired only 266,000 in April, about a
quarter of what had been expected.
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The benefits were extended as part of the $1.9 trillion government aid
package backed by the Biden administration and passed by a narrowly
divided Congress.
Alabama, Arkansas, Mississippi, Montana, and South Carolina have also
announced plans to terminate the benefits they blame for slowing hiring.
But it's an idea that is hotly disputed.
"Cutting pandemic UI benefits now, as some states have done or are
considering, will not just hurt workers who are depending on federal
benefits while they cannot find work or are unable to work, it will also
drag on the economy, as those benefits are supporting spending," wrote
the left-leaning Economic Policy Institute's Josh Bivens and Heidi
Shierholz.
Federal Reserve policymakers, who typically try to stay out of partisan
debates, on Tuesday pointed to factors other than unemployment benefits
for keeping workers on the sidelines.
"People do actually want to go back to work; they are willing to do
that," Federal Reserve Governor Lael Brainard said on Tuesday, adding
that school closures meant many needed to look after children and
couldn't look for jobs.
And they fear exposure to a virus that still claims nearly 700 American
lives a day.
In April when the data for the jobs report was collected, only one in
four working-age Americans were fully vaccinated, she said.
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People line up outside a newly reopened career center for in-person
appointments in Louisville, U.S., April 15, 2021. REUTERS/Amira
Karaoud
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NO MORE $300
All seven states ending the pandemic benefits for workers have
vaccination rates below the national average. All also have
below-average seven-day averages for new cases.
Collectively, about 5.5% of the labor force in the seven states that
have announced plans to end pandemic benefits were drawing on some
form of unemployment insurance, government data shows.
That compares with 13.7% in California and 9.4% in Texas.
But those benefits - which include an extra $300 a week in pay for
the unemployed - may loom larger for workers in states where wages
are relatively lower, or regular unemployment benefits are smaller.
The extra sum more than doubles Tennessee's maximum weekly benefit
of $275, for example.
St. Louis Fed President James Bullard said such state-by-state
differentials could mean that in some places, pandemic benefits
could indeed be holding back some workers.
"Rural labor markets are very different from urban ones," he said,
and some cities are more expensive than others. The same $300
"incentivizes people very differently."
The extra unemployment benefit "is a factor," he said. "It is not
the only factor."
(Reporting by Ann Saphir, additional reporting by Howard Schneider
and Dan Burns; Editing by Lincoln Feast.)
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