A growing number of states are opting out of federal unemployment benefits before they are due to expire in September in a move state leaders claim will incentivize more workers to find jobs.
At least 11 states are ending benefits as early as June 12, CNBC reported on Wednesday. That’s nearly three months ahead of the Sept. 6 expiration date for additional benefits included in the American Rescue Plan, which provides an extra $300 a week above typical state benefits.
Montana was the first state to announce it would opt out of federal benefits. Since that May 4 announcement, at least 10 other states have said they plan to follow suit: Alabama, Arkansas, Idaho, Iowa, Mississippi, Missouri, North Dakota, South Carolina, Tennessee and Wyoming.
The labor shortage in these states was cited as one of the reasons for eliminating enhanced benefits. Some officials claim the benefits dissuade people from returning to work, compounding the problem many employers have finding workers. However, last week, the federal government said only 266,000 jobs were created in April, which was well short of the more than 1 million expected by economists, and the U.S. still has about eight million fewer jobs than before the pandemic.
President Joe Biden has waved off claims that generous unemployment benefits de-incentivize people to find work, saying those claims lack sufficient evidence. He is joined by others who say the lack of available workers is more tied to COVID-19 factors such as continued school closings and a relatively low rate of vaccinations among working-age Americans.
If states do decide to opt out of enhanced federal unemployment benefits, some Americans face the prospect of losing their jobless entitlements entirely, including the long-term unemployed, self-employed and gig workers.
However, some experts believe the Labor Department might be able to prevent the loss of benefits for these Americans because of its legal power to keep providing aid through the federal Pandemic Unemployment Assistance program, which was established under the CARES Act.
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