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States are ending federal unemployment benefits early. Here’s what to know and what’s at stake


Ohio Gov. Mike DeWine said Thursday that the state would end its participation in federal unemployment programs June 26.

Justin Merriman | Getty Images News | Getty Images

So, what’s going on?

How soon is this happening?

How many people are affected?

What programs are involved?

How will my benefits change?

States will no longer issue an extra $300 a week to workers.

Those receiving state benefits will continue getting that aid, which generally amounts to half their pre-layoff wages. The average person got $350 a week in state benefits in March, according to the Labor Department.

(Benefits vary widely by state. Among opt-out states, for example, they ranged from $195 a week in Mississippi to $480 in North Dakota.)

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Certain workers won’t just get a benefit cut — they’ll lose aid entirely.

Those groups include the long-term unemployed (who’ve exhausted their maximum allotment of state benefits) as well as gig workers, the self-employed, freelancers and others collecting what’s known as Pandemic Unemployment Assistance.

This is the case in most — but not all — the states in question. In Arizona, for example, residents are only losing access to the $300.

Why is this occurring?

Is there a labor shortage?

Job openings hit a record high in March, the Bureau of Labor Statistics reported Tuesday. Meanwhile, the U.S. economy added 266,000 job payrolls in April — much weaker than the 1 million expected, the Bureau said last week.

In other words, there’s strong demand for labor as the economy reopens, but not a commensurate flood of workers onto payrolls.

Where are they most acute?

In Montana, for example, the labor market appears to be close to pre-Covid status, unlike the rest of the U.S., according to Peter Ganong, an assistant professor of public policy at the University of Chicago.

Many (but not all) states opting out of federal benefits have unemployment rates below the national average of 6.1%. (For context, the national rate is still almost double its 3.5% pre-pandemic level.)

Are unemployment benefits the problem?

Are there other factors?

I don’t think it’s possible to quantify how much each factor contributes to labor shortages. There are so many different headwinds blowing at the same time.

Daniel Zhao

senior economist at Glassdoor

Vaccines also weren’t widely available until recently. Workers need two to six weeks for full efficacy of the regimen — meaning many can’t safely return to work until June, according to Diane Swonk, chief economist at Grant Thornton.

There are other pandemic-era contributors, too: erratic school re-openings, child-care duties and a dearth of after-school programs that largely help low-income parents. Many baby boomers opted to retire early and may not rejoin the labor force — reducing overall labor supply.

The labor-shortage discussion is also often divorced from the issue of wages and hours — workers may want a job but not at prevailing wages or on erratic or part-time schedules.

It may also be unrealistic to expect workers to take a job at the same speed at which jobs are being posted. Labor supply typically takes longer to respond than demand, Zhao said.

“I don’t think it’s possible to quantify how much each factor contributes to labor shortages,” he said. “There are so many different headwinds blowing at the same time.”

Further, states opting out of federal unemployment funding may dilute some demand for businesses — and the need for additional workers — if it contributes to less 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 a one-time bonus for people who find and hold a job.

Arizona is offering $1,000 and $2,000 bonuses (on a first-come, first-served basis) to those who find part- and full-time jobs, respectively. They must complete at least 10 weeks of work.

Montana’s paying a $1,200 bonus to people who find full-time employment for four weeks.

Is this all set in stone?





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