Four states cut off federal unemployment benefits Saturday – and the White House is very unlikely to step in to prevent the loss of stimulus aid

unemployment insurance weekly benefits stimulus checks recession job losses coronavirus pandemic
  • Four states are cutting off stimulus jobless aid on Saturday.
  • The cuts in Mississippi, Missouri, Alaska, and Iowa yanks aid from 340,000 workers.
  • The Biden administration is very unlikely to step in and prevent the unemployment aid losses.
  • See more stories on Insider’s business page.

For nearly 340,000 workers on Saturday, a steady flow of federal assistance will abruptly end.

Mississippi, Missouri, Alaska, and Iowa are the first four Republican-led states to scrap their federal unemployment insurance programs. They include the $300 federal supplement to unemployment checks, along with a pair of federal programs that expanded government assistance to gig-workers, freelancers, and the long-term unemployed during the COVID-19 pandemic.

No extra federal assistance will be going out the door in those states after this weekend. That means the level of wage replacement with regular unemployment aid will not amount to half of workers’ past income, per data from Andrew Stettner, a senior fellow and jobless policy expert at the left-leaning Century Foundation.

Some 22 million US jobs were lost last year because of the pandemic, many of them low-wage positions.

Twenty-five GOP-led states are pulling the plug on unemployment insurance programs over the summer, imperiling aid for nearly four million people, according to Stettner. Republican governors argue that the federal aid is keeping people from re-entering the workforce, slowing the economic recovery.

“It has become clear to me that we cannot have a full economic recovery until we get the thousands of available jobs in our state filled,” Mississippi Gov. Tate Reeves said last month.

The unemployment aid was extended until early September under President Joe Biden’s coronavirus relief law enacted three months ago. But many employers and Republicans stepped up their complaints about worker shortages, particularly in the leisure and hospitality sector, though those sectors added jobs in the past two months.

Biden appears to have demonstrated some sensitivity to the criticisms. The president said last week that it “makes sense” for federal unemployment aid to expire on Labor Day. Then White House press secretary Jen Psaki said Republican governors have “every right” to cancel the administration’s jobless aid programs.

Sen. Bernie Sanders, along with some economic experts, argue that the government has a legal obligation to step in and distribute aid to at least gig workers through the Pandemic Unemployment Assistance program. But the Labor Department – which administers the program – has concluded it is unable to do much about it.

Some Democrats in Congress have been fiercely critical of the GOP moves.

“No one should face financial ruin for living in states run by Republicans,” Sen. Ron Wyden of Oregon said in a statement last month. He told Politico recently he was eyeing a new bill to address the situation, though such a plan faces an uphill climb in the evenly-divided Senate.

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Half of all US states are scrapping stimulus-era jobless benefits, cutting off 4 million workers from federal aid

GettyImages protest dc covid-19 stimulus relief
Demonstrators rally near the Capitol Hill residence of Senate Majority Leader Mitch McConnell, R-Ky., to call for the extension of unemployment benefits on July 22.

  • 25 states are pulling the plug on federal jobless benefits enacted during the earliest days of the pandemic.
  • The GOP-run states are halting the flow of jobless aid to 4 million jobless people.
  • A top Democrat suggested he was drafting a plan for the federal government to step in and provide aid.
  • See more stories on Insider’s business page.

Half of all US states are moving to scrap federal unemployment programs over the summer.

Twenty-five GOP-run states are pulling the plug on federal unemployment benefits several months before their scheduled termination in September. Republican governors and lawmakers argue the $300 weekly jobless aid is keeping people from searching for jobs.

Maryland was the latest on Tuesday. Gov. Larry Hogan announced the state would end its participation in federal benefits effective July 3. The coronavirus relief programs were set up in the earliest days of the pandemic last year during a surge in unemployment.

“While these federal programs provided important temporary relief, vaccines and jobs are now in good supply,” Hogan said in a statement. “And we have a critical problem where businesses across our state are trying to hire more people, but many are facing severe worker shortages.”

The labor story is probably a bit more complicated than that. Everything from COVID fears to childcare to a mismatch between the workers seeking roles and open jobs is likely contributing to the current situation.

A JPMorgan note last week said politics was playing a major factor in moves to halt the stimulus relief measures. “It therefore looks like politics, rather than economics, is driving early decisions to end these programs,” the bank said.

Regardless of the factors, though, the decision to prematurely end federal benefits will impact 4 million workers, according to an estimate from Andrew Stettner at the liberal-leaning Century Foundation.

And a good chunk of those workers will lose their benefits completely. That’s because they’re on Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC), two federal programs that expanded the eligibility for benefits and how long workers could receive them.

One of those workers is Susan Hardy, 70. She lives in West Virginia, where federal benefits will end on June 19 – just a little over two weeks away. Hardy is a longtime independent contractor working in gas and oil title research, and has been receiving PUA benefits since she was laid off from a project.

Susan Hardy
Susan Hardy.

“I sent messages to the governor begging him not to do that. At least let us go till September,” Hardy said. “It looks like my job, my work, could open back up a little bit in October, or maybe by November. At least going to September would allow me to get through more of the difficult periods before hopefully things will open up.”

But the Labor Department has recently concluded it cannot step in to prevent the loss of benefits for unemployed workers. Chair of the Senate Finance Committee Ron Wyden told Politico in an interview published Wednesday he was eyeing a new plan for the government to intervene.

“If it takes changing the law, I’ll change the law,” he said. A spokesperson for the Senate Finance Committee declined to comment further.

In the meantime, workers like Hardy – who said she made less on unemployment than in her prior work – are facing down an unemployment cliff in the coming weeks.

“Our work has not opened up. I mean, they want to say, go to work, go to work, go to work,” Hardy said. “But if your work is not there, you cannot go to work. And we need those – I realize it’s only till September, it’s not that much longer – but September definitely beats June.”

Are you unemployed and have a story you want to share? Contact these reporters at jkaplan@insider.com and jzeballos@insider.com.

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There’s no help coming anytime soon for the millions about to lose federal unemployment benefits in two dozen GOP states

Joe Biden sad
President Joe Biden.

  • At least 24 red states are starting to end their federal jobless benefits within weeks.
  • The moves will impact 4 million people on unemployment, with about half losing all government aid.
  • The Labor Department has concluded it has limited authority to step in to keep aid flowing.
  • See more stories on Insider’s business page.

Almost half of all US states have decided to end their participation in federal unemployment benefits, setting up some workers to receive drastically reduced payments – and others without any federal relief coming through the door.

Twenty-four GOP-run states are moving to slash federal unemployment benefits within weeks, citing a so-called labor shortage and lack of hiring. Governors in those states are ending programs set up in the early in the pandemic, which added federal cash onto state unemployment checks and extended the weeks people were eligible for aid. Nebraska was the latest to pull the plug on all stimulus jobless aid programs, on Tuesday.

The measures will slash jobless aid from 4 million people, per an estimate from Andrew Stettner at the liberal-leaning Century Foundation. That projection means that nearly one in four of all Americans receiving unemployment are poised to experience some reduction in their benefits.

One of them is Scott Heide, a 35-year-old in Florida. His state’s governor, Ron DeSantis, announced this week that the state would be terminating its participation in the extra $300 in weekly federal benefits effective June 26.

Heide told Insider that he’s been on unemployment for almost a year. When he lost his job, he also lost his health insurance, and has had to pay over $800 a month for COBRA insurance since. He had to leave his apartment and move back in with his parents.

The original $600 supplement “really made a big difference,” he said, but that expired after just a few months. Then, Biden’s American Rescue Plan added in a $300 benefit. “That was like my lifeline” for paying bills, Heide said. But at a certain point he said he knew it was a “matter of time” before DeSantis went down the same road as other GOP governors.

“It’s just really tough because I’m trying to get a job, but it’s not that easy. And I feel like I’m being punished for no reason when it’s out of my control if somebody offers me a job. All I can do is apply,” Heide said.

Florida is an anomaly among the GOP states moving to end federal benefits in that it’s only stopping the additional $300 – for now, at least – and keeping in place programs that expand unemployment eligibility and the number of weeks recipients can access benefits.

In other states, about 2.1 million workers on those programs – Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) – will lose their benefits entirely, per Stettner’s calculations.

Some advocates and politicians have said that Biden’s Labor Department has an obligation to step in and provide PUA benefits, arguing that it’s mandated under the CARES Act.

Sen. Bernie Sanders wrote a letter to Labor Secretary Marty Walsh pressing the Labor Department to continue paying out benefits on its own.

Other Democrats have called on the agency to continue exploring options without specifically urging them to distribute the aid.

“I think the administration should be looking under every rock, and every nook and cranny for ways to protect the vulnerable,” Wyden said in an interview on Tuesday. He suggested he was looking at “next steps.”

Yet it appears that the Biden administration won’t be able to prevent a lapse in unemployment aid in the GOP states. The Labor Department has concluded it’s probably unable to help pay out the benefits, an administration official told Insider last week, given that unemployment systems are administered as a federal and state partnership built on agreement from the states.

The Labor Department did not immediately respond to a request for comment.

“I think there is still going to be litigation on this topic,” Stettner told Insider. “The real legal question is whether DOL has the authority to force states to pay benefits or find a way to get them out themselves.”

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