More States Are Stopping Federal Unemployment Benefits Early — Are Your Benefits About to Be Cut?

Young African American mother looking for a job using the laptop and struggling while her daughter is being home schooled due to the lack of income.
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Unemployment benefits as part of the American Rescue Plan COVID-19 relief bill are slated to last at least until September, but a growing number of states are cutting them short early.

See: Weekly Jobless Claims at New Pandemic Low — Could This Translate to a Better Job Market and Higher Pay?
Find: Here’s a Full List of Unemployment Resources for Your State

Montana was the first state to opt out of the federal benefits plan, which includes a $300 weekly payment, with Gov. Greg Gianforte announcing on May 4 that the federal unemployment expansion would end on June 27 in his state, CNBC reported. However, workers there will receive a one-time return-to-work bonus of $1,200 after they accept a job and complete a month of paid work, according to Axios.

Last week, Arkansas Governor Asa Hutchinson told residents that the state would be ending the federal unemployment program two months early, at the end of June. Hutchins believes the high number of job vacancies in the state renders further expanded-unemployment aid unnecessary. “Our state unemployment rate of 4.4 percent is well below the national rate and only 0.6 percent above the pre-pandemic level. At this point in our economic recovery, I have confidence that the extraordinary federal unemployment measures that have been put in place for over a year have accomplished their purposes,” he stated in a letter. Hutchinson added that he feels continuing the payments until their planned expiration of September 4th “is not necessary and actually interferes with the ability of employers to fill over 40,000 job vacancies in Arkansas.”

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So far, Republican governors of at least 15 states throughout the U.S. have announced they will be ending the benefits early, citing that the expanded unemployment insurance is preventing people from taking open positions, CNBC reports.

See: How to Go Back to Work And Still Keep Unemployment Benefits
Find: Tax Refunds on 2020 Unemployment Benefits Due to Begin This Month

South Carolina Governor Henry McMaster also noted that in many cases, unemployment is paying workers more than they earned before they lost their jobs, turning what was meant to be an emergency relief measure into a federal entitlement, according to USA Today.

Iowa Governor Kim Reynolds stated she is cutting the federal unemployment benefits early after a large number of small business owners complained that they cannot find enough job applicants. Mississippi Governor Tate Reeves echoed similar sentiments, claiming that he came to the decision after several meetings with small business owners, reports USA Today.

This comes amidst the recent release of information from the Bureau of Labor Statistics that showed that there are 2 million job vacancies in the United States that have yet to be filled. However, supporters of the expanded unemployment benefits say that opponents’ claims are based on assumptions that fail to consider the barriers to working, such lack of daycare and safety concerns, according to Axios.

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See: How to File for Unemployment and What to Do After Losing Your Job
Find: Biden Urges Boost in Wages Amid Disappointing Jobs Report

The administration is also pushing back against the Republican governors’ claims. Treasury Secretary Janet Yellen told reporters on Thursday, “If the unemployment bonus was slowing down hiring, one would expect lower job growth in states and sectors where unemployment insurance is particularly high. In fact, what one sees is the exact opposite,” Axios reports.

The U.S. only added 266,000 jobs in April, a major disappointment, especially following March’s addition of 916,000 jobs. The figure is well below expectations, as economists surveyed by Dow Jones Newswires and The Wall Street Journal were expecting one million new nonfarm payroll jobs — which excludes farm workers — to be created last month, according to Barron’s.

Payrolls were still more than 8 million jobs short of pre-COVID-19 levels as of the end of April, according to ADP, and 150,000 fewer daycare jobs exist now than before the pandemic.

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About the Author

Georgina Tzanetos is a former financial advisor who studied post-industrial capitalist structures at New York University. She has eight years of experience with concentrations in asset management, portfolio management, private client banking, and investment research. Georgina has written for Investopedia and WallStreetMojo. 

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