Ohio Governor Mike DeWine announced Thursday that the state will end its participation in the federal unemployment program on June 26.
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At least 16 states have opted to opt out of a federal program that pays unemployment benefits.
As of Thursday, Alabama, Arkansas, Arizona, Georgia, Idaho, Iowa, Missouri, Missouri, Montana, North Dakota, Ohio, South Carolina, South Dakota, Tennessee, Utah. Includes State, Iowa.
All led by the Governor of the Republican Party.Montana The first state to announce its withdrawal on May 4.
How soon does this happen?
The American Rescue Plan has made these federal programs available until Labor Day, September 6.
States will end their participation approximately two months or more earlier from June 12th to July 10th (depending on the state).
The governor’s decision will reduce or cut off the interests of nearly two million people.
According to Andrew Stettner, Senior Fellow of the Century Foundation, about $ 11 billion in total funding is at stake.
The state has withdrawn from the program enacted by the CARES Act in March 2020.
Together, the program increased the amount of weekly assistance, extended its duration, and funded workers who were not normally eligible for state benefits.
The state no longer issues workers an additional $ 300 a week.
Those receiving state benefits will continue to receive the assistance, which is usually half the pre-dismissal wage. According to the Ministry of Labor, the average person earned $ 350 a week in state benefits in March.
(The benefits vary widely from state to state. For example, in opt-out, it ranged from $ 195 a week in Mississippi to $ 480 in North Dakota.)
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Not only will certain workers have reduced benefits, but they will also lose assistance altogether.
These groups bring together what is known as pandemic unemployment support, including long-term unemployed people (who have run out of their maximum allocation of state benefits), as well as gig workers, self-employed people, and freelancers.
This is true for most (but not all) of the states in question. In Arizona, for example, residents have only $ 300 available.
Why is this happening?
The governor points to labor shortages as a driving force in the decision to opt out of federal funding.
They argue that increasing unemployment benefits provides incentives for people to stop looking for jobs at home, and companies are struggling to fill the job openings.
Missouri Governor Mike Parson said, “These benefits provided supplementary financial support during the heyday of COVID-19, but they are temporary and their continuation is faced by us. It exacerbated the labor problem. “
According to economists, it is difficult to identify the answer with the available data. However, evidence suggests that labor shortages are occurring in at least some regions and sectors.
According to Daniel Zhao, senior economist at Glassdoor, there are two most compelling evidences.
Job offer The Bureau of Labor Statistics reported on Tuesday that it hit a record high in March. Meanwhile, the US economy added 266,000 jobs in April. This is far weaker than the expected million, the agency said last week.
In other words, there is a strong demand for the workforce as the economy resumes, but there is no corresponding flood of workers’ salaries.
Where are they most acute?
The shortage seems to be most pronounced in industries such as the food service industry and leisure and hospitality, including restaurants.
This is where most anecdotes of shortages seem to be occurring among business owners and where businesses like it. Zhao said McDonald’s and Chipotle are raising wages and offering bonuses to attract workers.
Some states may be experiencing a tighter workforce than others.
In Montana, for example, unlike the rest of the United States, the labor market appears to be close to its pre-Covid state. according to To Peter Ganon, an assistant professor of public policy at the University of Chicago.
The unemployment rate in many (but not all) states that opt out of federal benefits is below the national average of 6.1%. (In context, the national tax rate is still almost double the pre-pandemic 3.5% level.)
Does unemployment benefit the problem?
According to economists, unemployment benefits are likely to play at least a small role.
Studies show that the higher the benefits, the less intense the job hunting activity. This wasn’t a problem in the early days of the pandemic, when there was a shortage of work. But it’s hard to say whether they may or may not be the factors now.
According to labor experts, the coronavirus is likely to be the main problem, not the unemployment benefits.
New daily infections are declining, but still tens of thousands. And less than half (46%) of American adults are fully vaccinated. According to the Centers for Disease Control and Prevention. (The share, including the elderly, is low in the working population.)
Vaccines were also not widely available until recently. According to Grantsonton Chief Economist Dian Wonck, workers need two to six weeks for the regimen to be fully effective. This means that many people will not be able to return to work safely until June.
There are other contributors to the pandemic era. Irregular school reopening, childcare obligations, and a lack of after-school programs that greatly help low-income parents. Many baby boomers choose to retire early and may not return to the workforce, reducing the overall labor supply.
Labor shortage discussions are also often divorced due to wage and time issues — workers may want a job, but not a general wage or irregular or part-time schedule. ..
It may also be unrealistic to expect workers to get jobs as fast as the jobs are posted. According to Zhao, labor supply usually takes longer to respond than demand.
“I don’t think it’s possible to quantify how much each factor contributes to the labor shortage,” he said. “There are so many different headwinds blowing at the same time.”
In addition, states that opt out of federal unemployment funding may diminish some of the demand for businesses and the need for additional workers if they help reduce spending at the local level.
Some states pay a return to work bonus. what’s that?
Montana and Arizona are replacing enhanced unemployment benefits with one-time bonuses for those who find and hold jobs.
Montana pays a $ 1,200 bonus to those who are employed full-time for four weeks.
Senator Bernie Sanders, Vermont, and the National Employment Law project have petitioned US Secretary of Labor Marty Walsh to intervene on behalf of workers this week.
They claim that, by certain wording of the CARES Act, Walsh has the legal authority to prevent the loss of interests of self-employed, gig workers, and other workers who collect PUA. (However, the same flexibility does not seem to apply to other programs.)
It is unclear if the Ministry of Labor will attempt to intervene.
The state has terminated its federal unemployment benefits early.What you need to know
Source link The state has terminated its federal unemployment benefits early.What you need to know