Benefits of Millions of Unemployed Scheduled to Expire Sept. 6

By GREGORY N. HEIRES

An estimated 7.5 million people will lose their extra $300 weekly Covid-19 unemployment benefit on Sept. 6—unless the federal government decides at the last moment to extend their coverage.

The expiration follows the decision of 26 states to end the federally-funded unemployment weekly benefit of millions of other workers, in some states, months before the September cutoff.

“We are still struggling with a pandemic-induced downturn,” said Trudy Goldberg, the National Jobs for All Network chair. “Millions of people continue to be out of work. We believe it is both premature and cruel for states to end this vital, extra COVID-19 benefit.”

All but two of the 26 states that denied the benefits are led by Republican governors, who said they were carrying out the cuts to spur hiring. But so far, there is little evidence that the cuts are having that impact.

Unemployed workers and advocacy groups mobilized—in some cases successfully—against the state plans to carry out early cuts of the federal government’s extra pandemic unemployment benefits. At least seven states faced lawsuits over the cuts.

In July, a judge in Maryland rejected Republican Gov. Larry Hogan’s lawsuit to block the state’s plan to cut off benefits. In Indiana, a judge held up a cutoff of COVID unemployment benefits to 230,000 unemployed workers.

Another fightback effort included a Facebook group of 1,800 Tennesseans that sued Gov. Bill Lee and the State of Tennessee for stopping federal unemployment benefits more than two months before the expiration scheduled for September.

In June, the grassroots groups, Unemployed Workers Union of Ohio and Unemployed Action Ohio—with support from the Ohio Organizing Collaborative—held a news conference at the Statehouse to protest Gov. Mike DeWine’s benefit cuts.

Cuts Fail to Spur Hiring
Earlier this year, the National Employment Law Project estimated that more than 4.7 million workers stand to lose the $300 supplement in the 26 states. But the states’ attacks on unemployment benefits went beyond the $300 cut. Twenty-two states also cut other federal pandemic benefits as well as state benefits. NELP estimated that would leave 2.3 million workers without any federal and state assistance at all.

About a month after the two dozen GOP-led states began slashing the federal government’s extra benefit, a group of Morgan Stanley economists found the cuts had little effect on the labor market—no more than such factors as a lack of child care and transportation or health concerns.

“Conservative cuts in unemployment benefits make it harder for people to reflect on whether they want to go back to work, even as COVID cases are rising and even while average wages stay low, ”said historian Frank Stricker, author of “American Unemployment: Past, Present, and Future” and a National Jobs for All Network board member. “Despite the stories about employers having to raise pay to attract workers, real hourly wages (in purchasing power) have fallen more than 2% over the year,” according to Stricker. “The shortage of workers is not short enough to increase wages faster than prices. Making more people seek work right away means less pressure for employers to raise pay.”

In May, Biden dismissed the suggestion that the extra $300 benefit is a disincentive for unemployed workers to return to work. The pandemic led to 22 million job losses, Biden said at that time.

The truth is that for many workers, the lack of child care, poorly-paying jobs, a fear about exposure to Covid-19, a reduction in public transportation, unstable jobs without health coverage and sick leave and other benefits, and considerations about a career change are more important factors than unemployment insurance, as they weigh their decision to return to work.

In his podcast, Economic Update, economist Richard D. Wolff charged that the Republican-led states were answering the call of businesses to make workers return to their jobs while providing inadequate compensation. “Labor Shortage?” Wolff said. “Listen, Jack. You raise the wages; the shortage will vanish.”

In July, NJFAN Chair Goldberg took a similar position and expressed support for the grassroots groups in Ohio and other states fighting against the early cutoff of the weekly $300 benefit.

In June, President Joe Biden said it “makes sense” for the federal government to stick with its plan for the benefits to expire in September. He was right to criticize states for opting to end the federal benefit early. Unfortunately, the president doesn’t feel the Sept. 6 expiration is also premature.

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