The number of those receiving unemployment benefits is decreasing at a faster rate in the states that announced an end to enhanced federal unemployment benefits in June, suggesting that halting the aid could encourage more people to return to the workforce, The Wall Street Journal reported.
Many Republican governors said they moved to end the federally funded benefits due to complaints by business owners about a labor shortage, apparently because the enhanced benefits served as a disincentive for many to re-enter the workforce, especially in lower paying jobs.
Missouri Gov. Mike Parson said the benefits were needed during the worst of the coronavirus pandemic, when many businesses had to shut down for extended periods, but the continuation of the enhanced benefits has “worsened the workforce issues we are facing.”
Federal pandemic aid bills increased unemployment payments by $300 a person each week and extended those payments for as many as 18 months, much longer than the typical 26 weeks. The benefits are due to expire in September, but states have the option to end them before that date.
Four states, including Missouri, cut off payments as of June 12. Seven others did so on June 19, and benefits just expired in 10 more states. Four more will curtail benefits by July 10.
States that announced an end to enhanced federal unemployment benefits in June experienced a 13.8% decrease in residents receiving benefits from mid-May through June 12, according to an analysis by Jefferies LLC, The Wall Street Journal reported. States announcing a halt to federal unemployment in July saw a 10% decline in those receiving state benefits over the same period, while those ending federal unemployment in September recorded only a 5.7% decline.
However, other economists, as well as many Democrats have contended that other factors are making it difficult for people to return to the labor force, such as the lack of child care and fear of catching the coronavirus.
Steven Fazzari, an economist at Washington University in St. Louis, said it was a mistake for Missouri and other states to end the extended benefits early, citing as a reason that continuing the aid for a longer period would have given job seekers more time to find the most appropriate job that best fits their skills and location.
“The pandemic was a massive disruption, and many people only were able to receive their vaccines recently,” Fazzari said. “It’s reasonable to give them to September to adjust.”