Study: Early unemployment cutoff would cost 16M people $100B

Cutting off federal emergency unemployment benefits ahead of their September expiration date would prevent some $100 billion from flowing to 16 million people, according to a study by the left-leaning Century Foundation.

The study comes as Republicans push to scale back the policy, which they argue is responsible for labor shortages.

The study found that among the 12 states that have already announced an early end to additional benefits, 895,000 workers would lose a collective $4.7 billion.

“These derelictions of responsibility are an affront to workers in these states,” the study’s author Andrew Stettner wrote. “Workers were right to believe that they would receive these benefits through September 6, but now they’ve been denied this federal aid.”

Unemployed workers are eligible for federal programs giving them an additional $300 in weekly benefits, as well as programs that extend benefits for those who have been collecting benefits for a prolonged period of time and offer benefits to populations that are normally not eligible, such as gig economy workers, freelancers or the self-employed.

While so far the cuts have only been announced by a handful of states led by GOP governors, many of which have unemployment figures below the national average, GOP senators on Thursday called for revoking the additional federal benefits.

“Enhanced unemployment benefits are creating an incentive for not going back to work until they expire,” Sen. Marco Rubio (R-Fla.) said, citing complaints from small businesses having trouble hiring workers.

“I think it’s important for us to acknowledge that we have a labor crisis, that a government program has exacerbated it,” he added.

Sen. Roger Marshall (R-Kan.) acknowledged the role that lack of child care and mismatched skills can play in keeping people unemployed, but called on his state’s Democratic Governor Laura Kelly to cut the emergency benefits early.

Iowa Sen. Joni Ernst (R) said that taking away the federal benefit would level the playing field for businesses that operate across state lines, but also said the decision should be left to the states.

“This should be a state issue, but there are many governors that aren’t doing the right thing by those businesses,” she said.

Democrats have blasted the moves to curtail benefits, saying they would pull the rug out from millions of unemployed people struggling through the end of the pandemic.

They argue that federal data does not support the idea of widespread labor shortages, despite plenty of anecdotal evidence. The labor market, they add, is not expected to fully recover until 2022 or even 2023.

Sen. Bernie Sanders (I-Vt.) on Thursday requested that Labor Secretary Marty Walsh take action to block GOP governors from pulling back the additional benefits.

“It is critical that the Department of Labor does everything in its power to ensure that jobless Americans continue to receive this aid as the law intended,” he wrote.

While it remains unclear whether the Labor Department has the authority to push through the benefits, the Labor Department said it was doing its utmost to keep a safety net in place.

“Secretary Walsh and the Biden Administration have been doing all they can to take concrete action to prevent anyone from falling through the cracks as we know unemployment benefits have served as a vital lifeline for workers throughout the pandemic – to help them buy food, pay rent and remain healthy,” Labor Department spokesperson Egan Reich told The Hill.