Biden said he’d cut down on unemployment benefits, but he really might reinstate a pre-pandemic job-seeking policy

Biden
President Joe Biden.

  • Biden is pushing states to reinstate job-seeking requirements for people to stay on unemployment.
  • “Anyone collecting unemployment who is offered a suitable job must take the job,” he said.
  • It comes as the GOP ramps up criticism that unemployment aid is dissuading people from seeking jobs.
  • See more stories on Insider’s business page.

President Joe Biden said in a speech on Monday that Americans receiving unemployment benefits must either take a job that is “suitable” or lose their benefits, as he encouraged states to reinstate a pre-pandemic policy of requiring people to search for work.

“We’re going to make it clear that anyone collecting unemployment who is offered a suitable job must take the job or lose their unemployment benefits,” Biden said at the White House.

According to a White House fact sheet released after the speech, the Department of Labor will “reaffirm longstanding” unemployment-insurance requirements to ensure that states, workers, and employers understand the rules regarding the benefits.

The Department of Labor will also issue a letter to states reaffirming that people receiving benefits cannot turn down a suitable job to continue receiving their benefits.

Experts said these job-seeking guidelines were in place before the pandemic, and states scrapped them last year as the economy crashed, which caused a surge in unemployment. While the economic situation is improving, those experts said factors like a lack of childcare and school closures were keeping some people out of the workforce.

“On the whole, the Biden Administration is moving to return UI slowly like the rest of the economy to its” pre-pandemic rules, Andrew Stettner, an unemployment expert at the Century Foundation, said in emailed comments to Insider.

“Advocates are concerned that policy makers ensure that no workers are cut of off benefits because they cannot find affordable child care, and the reinstatement of work search requirements raises the stakes for this type of protections,” he added.

This announcement came after a jobs report last week that fell significantly short of expectations, with Republican lawmakers casting the blame on too-generous unemployment benefits disincentivizing Americans from returning to work.

While Biden said in his speech that “we don’t see much evidence” of benefits hurting job growth, his remarks suggested he was listening to GOP criticism on the issue.

Since the start of the pandemic, Republicans and businesspeople have criticized expanded unemployment insurance – inserted into March 2020’s CARES Act by Democrats in the House – as too generous. While the $600 federal unemployment addition to weekly benefits expired last year, Congress reinstated it in December at $300 a week, which Biden extended through September 6 as part of the stimulus law in March.

The US Chamber of Commerce called for an end to the benefits in the wake of the April jobs numbers, but Democrats like Sen. Bernie Sanders of Vermont said on Twitter that “workers desperately need” the benefits.

While states waived their unemployment-benefits work requirements at the start of the pandemic, 39 of them have already started, or are planning to, reimpose them.

Biden said: “We’ll insist that the law is followed with respect to benefits, but we’re not going to turn our backs on our fellow Americans.”

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Some GOP states are moving to end federal unemployment benefits, which could impact at least 276,000 workers

People wait on line to file for unemployment in Fayetteville, Arkansas, April 6, 2020.
People wait on line to file for unemployment in Fayetteville, Arkansas, April 6, 2020.

  • Some GOP-led states are opting to end expanded unemployment benefits early to entice workers back.
  • The move could affect the finances of at least 276,000 people, an unemployment expert told Insider.
  • Disparate state employment systems may have already caused inequities, especially for Black workers.
  • See more stories on Insider’s business page.

At least 276,000 workers are at risk of losing federal unemployment benefits in GOP-led states.

Several states are moving to cut expanded unemployment insurance in an effort to push those collecting jobless benefits to return to work.

The move comes as April’s surprisingly dismal jobs report showed just a fraction of anticipated jobs returning, and anecdotal evidence of (generally low-paying) companies having difficulty hiring enough workers to reopen in a fuller capacity.

South Carolina, Montana, and Arkansas are ending their participation in federal assistance programs for the unemployed in late June. They are chiefly targeting the $300 federal unemployment supplement, a key part of President Joe Biden’s $1.9 trillion stimulus law which expires on Labor Day.

Republican Gov. Greg Gianforte in Montana slammed the enhanced unemployment insurance on Friday, calling it “no-work bonuses” in a tweet. Prior to the jobs report, South Carolina Gov. Henry McMaster – another GOP member – said the state will stop its participation in federal unemployment by the end of June.

“This labor shortage is being created in large part by the supplemental unemployment payments that the federal government provides claimants on top of their state unemployment benefits,” McMaster wrote.

greg gianforte
Montana Gov. Greg Gianforte, a Republican.

‘They’re canceling federal pandemic benefits’

“They’re not just taking away the $300 supplement, they’re canceling federal pandemic benefits,” Andrew Stettner, an unemployment expert at the Century Foundation, told Insider.

“Those who are on PUA and PEUC, their benefits will get cancelled,” he said, referring to Pandemic Unemployment Assistance, the program providing benefits to gig workers and contractors, and Pandemic Emergency Unemployment Compensation, which doles out aid to the long-term unemployed.

Stettner calculated that at least 276,000 people could be affected in the states slashing aid two months before it is set to expire, though the amount is likely to grow as other GOP-led states like Indiana suggest they could soon follow suit.

Other states are reinstating job-searching requirements that were waived during the pandemic. Those include Maine, New Hampshire, North Carolina, Pennsylvania, and Rhode Island, The Associated Press reported.

Individual states rolling back federal unemployment benefits could have a disproportionate impact on marginalized workers. A report from the left-leaning Economic Policy Institute (EPI) looked at how much of the UI disbursed in each state was from federal benefits. The EPI report notes that this could impact workers along racial lines, since states where Black Americans make up a larger share of the population tend to have weaker UI benefits.

In South Carolina, for instance, around 76% of total UI came from federal programs in the fourth quarter of 2020. Arkansas and Montana both leaned heavily on federal benefits in disbursement of UI benefits, with federal UI making up 74.7% and 68.7% of their total disbursed benefits, respectively.

“The US economy is still down 8.2 million jobs from what we had prior to the pandemic – and if you account for people newly entering the workforce since then, we are down over 11 million jobs,” David Cooper, a senior economic analyst at EPI, said in an email to Insider. “So, the economy is simply not at a place where we should be cutting back UI benefits. There are far more people looking for work and unable to find it than there are employers unable to fill vacancies, and pulling back on UI will only slow down the recovery.”

President Joe Biden doubled down on the need for unemployed workers to get back to work in a Monday address, saying “we’re going to make it clear that anyone collecting unemployment who is offered a suitable job must take the job or lose their unemployment benefits.” But, he noted, COVID-19 exceptions are still in place “so that people aren’t forced to choose between their basic safety and a paycheck.”

Biden’s statements don’t amount to a new policy change from his administration, therefore they only underscore steps already on the books that states can take to encourage people to jump back into the workforce.

But, Biden said, his father used to tell him that a job is more than a paycheck.

“I think that people who claim Americans won’t work, even if they find a good and fair opportunity, underestimate the American people,” Biden added. “So we’ll insist that the law is followed with respect to benefits, but we’re not going to turn our backs on our fellow Americans; 22 million people lost for jobs in this pandemic through no fault of their own.”

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The US ‘real’ unemployment rate fell slightly in April amid an otherwise dismal jobs report

unemployment jobless claims
People who lost their jobs wait in line to file for unemployment following an outbreak of the coronavirus disease (COVID-19), at an Arkansas Workforce Center in Fayetteville, Arkansas, on April 6, 2020.

  • April’s job report came as a surprise, with gains far lower than expected and unemployment up.
  • But “real” unemployment did tick down, showing at least one sign of economic improvement.
  • The jobs report contained a lot of other surprises, including increased temporary layoffs.
  • See more stories on Insider’s business page.

The April payrolls data was largely a massive disappointment, but not entirely.

The US economy added only 266,000 jobs last month, according to the Bureau of Labor Statistics, far undershooting estimates calling for an increase of 1 million payrolls. The unemployment rate rose to 6.1% from 6%, and a handful of industries shed jobs despite the easing of economic restrictions.

While nearly all gauges pointed to a slowing recovery, an alternative measure of nationwide unemployment improved slightly from its March level. The “real” unemployment rate previously mentioned by Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen fell to 8.3% in April from 8.7%, by Insider’s calculations. The rate includes workers who have been misclassified as having a job while on furlough and Americans who’ve dropped out of the labor force since February 2020.

The decline suggests about 13.6 million Americans are still jobless despite the economy steadily recovering through the spring. The number of Americans misclassified as holding a job while actually furloughed dropped, dipping from 636,000 to 558,000.

The U-6 rate, which includes those employed part-time for economic reasons, and those marginally attached to the labor, dropped again in April. It went from 10.9% in March to 9.9% in April; while that’s yet another dip, the rate is still nearly in the double digits.

Surprising and confusing data on April jobs

All of those numbers evoke a jobs report that is, in a word, confusing. Industries such as leisure and hospitality – the seeming epicenters of concerns over a labor shortage – saw the strongest job growth, while temporary layoffs also grew in April, which seems to contradict narratives of booming businesses looking to hire. Around 10 million people continue to be unemployed.

An analysis from Morning Consult found that, as of April 1, more workers expected to lose income over the next four weeks. By the end of April, adults across the income spectrum were still experiencing income loss at an “elevated” level. And the number of high-earners – those making over $100,000 – experiencing pay loss the week before actually went up.

It’s hard to say what, exactly, caused the jobs report to look the way that it did; possible reasons include unemployment benefits, temporary layoffs, and a dispiriting dip in female employment. All in all, the jobs report showed a potential turning point in recovery, marking a significant departure from the perhaps easy gains of March.

One mismatch: Childcare, and safely reopened full-time schools, are not necessarily caught up to the adults who want to rejoin the workforce, or have exited it.

“I think we’ve all been very hopeful that we’re turning the corner, and we’re moving forward, and that components of this pandemic – that the big principal issues of the pandemic are behind us – but I think that we need to rethink that,” Misty L. Heggeness, a principal economist and senior advisor at the US Census Bureau, told Insider. “That’s not true for a subset of our workforce. I think we’ve seen improvements until now because these have been the low hanging fruits.”

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Biden is betting big with plans to remake America. Here are 6 takeaways from Biden’s speech.

  • President Joe Biden delivered his first speech to a joint session of Congress on Wednesday night.
  • Biden called for an ambitious pandemic economic recovery plan focused on jobs, infrastructure, and childcare.
  • He also called for changes to immigration and foreign policy and asked the Senate to pass civil rights legislation.
  • See more stories on Insider’s business page.

President Joe Biden delivered his first speech to a joint session of Congress on Wednesday night, on the eve of his 100th day in office.

In his address before a pared-down audience due to the pandemic, Biden called for an ambitious pandemic economic recovery plan focused on jobs, infrastructure, childcare, and education. The proposals are some of the most progressive in decades – and ones unlikely to garner Republican support, as evidenced by GOP reactions in the chamber and on Twitter.

He also called for changes to immigration and foreign policy and asked the Senate to pass signature civil rights legislation – including police reform and voting rights legislation.

Here are the biggest takeaways from the speech.

Biden is betting big with his spending plans

Biden detailed an ambitious $4 trillion spending program focused on overhauling the American economy and recasting the role of government to better secure the welfare of families.

He’s fresh off the passage of a $1.9 trillion stimulus law in March, a measure broadly popular with American voters in part due to the $1,400 direct payments. He touted the federal checks and said the law contributed to a fall in hunger.

Biden quickly pivoted to his latest pair of economic plans, one to upgrade physical infrastructure and the other meant to level the playing field for middle and low-income families. The latest is a $1.8 trillion economic plan aimed at setting up sweeping new federal programs in education, childcare, and healthcare.

“These are the investments we make together, as one country, and that only government can make,” Biden said. “Time and again, they propel us into the future.”

Republicans are very unlikely to support the newest “American Families Plan” proposal. “There are individual components that conservatives might be more supportive, but the full $2 trillion package financed by big new taxes is absolutely a non-starter for Republicans,” Brian Riedl, a budget expert at the right-leaning Manhattan Institute, said.

The president also called on Congress to move on healthcare reform and raising the minimum wage

Biden urged Congress to raise the federal minimum wage, which hasn’t budged since 2009. “No one should work 40 hours a week and still live below the poverty line,” he said.

Democrats are united on raising the minimum wage but sharply disagree on the amount. Some like Sen. Bernie Sanders are pushing $15 an hour minimum wage, but others like Sen. Joe Manchin support a lower amount.

Biden also called lawmakers to step in and lower prescription drug costs, an initiative reportedly scrapped from his economic package.

“Let’s do what we’ve always talked about,” the president said. “Let’s give Medicare the power to save hundreds of billions of dollars by negotiating lower prices for prescription drugs. ”

Instead, he’s proposed extending health insurance subsidies for the Affordable Care Act as part of his spending programs.

He also threw his support behind the PRO Act, a bill designed to make it easier for workers to unionize. It has stalled in the Senate, unable to cross the 60-vote threshold known as the filibuster.

Biden talks immigration – but not the border

Biden also again called on Congress to pass comprehensive immigration reform, stressing the need to provide a pathway to legal status for millions of undocumented people in the United States – stressing that this was a bipartisan goal.

“Let’s end our exhausting war over immigration,” he said. “For more than 30 years, politicians have talked about immigration reform and done nothing about it. It’s time to fix it.”

The day he took office, Biden unveiled a proposal that would grant permanent residency to many migrant farm workers and citizenship for those who came to the US as children. On Wednesday, Biden said Congress should work to make those specific provisions law right away, acknowledging the difficulty of passing more robust reform in a 50-50 Senate.

“Congress needs to pass legislation this year to finally secure protection for the Dreamers – the young people who have only known America as their home,” he said. He also called for legislation to grant “permanent protections for immigrants on temporary protected status” and a process for granting citizenship to “farmworkers who put food on our tables.”

Biden did not, however, speak to the current status of US borders, which remain shuttered to all but unaccompanied minors – a recent influx of whom overwhelmed authorities, who have since scrambled to convert hotels and convention centers into holding facilities. The Biden administration continues to expel other asylum-seekers fleeing poverty and violence in the Americas, citing the pandemic and the need to rebuild a processing system decimated by the last White House.

Biden laid out a foreign policy plan that differs from the Trump doctrine

During his address, Biden’s focus on foreign policy centered mainly around strengthening the US’ relationship with allies and forging working but stern relations with Russia and China.

Biden said that in approaching foreign policy, his administration would operate on the belief that, “America is the most unique idea in history.”

In a contrast to Trump, Biden directly charged Russia for interference in the 2016 elections as well as the recent SolarWinds cyberattacks which breached government and private business systems.

The President added that in conversations with his Russian counterpart, he has “made clear,” to Vladimir Putin that the US will not seek escalation, but Russia’s, “actions will have consequences.” Biden added that the US and Russian should cooperate when interests are aligned.

Biden added that he had held hours-long conversations with Chinese President Xi Jinping and put forth a similar balance. The President also singled out Iran and North Korea’s nuclear programs, describing them as threats, but committed to working with allies and both nations through “diplomacy and stern deterrence.”

He also spoke about his promise to end the “forever war in Afghanistan,” acknowledging and justifying the US’ long footprint in the country. Saying that the US fulfilled their promise to bring Osama Bin Laden to the “gates of hell,” and that soldiers are serving in “the same war zone as their parents,” he said it’s time to bring troops home.

Biden addressed gun control policy and urged congressional action against gun violence in the US

During his address to Congress, the president called gun violence an “epidemic in America,” mentioning how the flag at the White House flew half-staff to mourn the lives lost at the Atlanta-area shootings and mass shooting in Colorado.

“In the week between those mass shootings, more than 250 other Americans were shot dead. 250 shot dead,” Biden said.

He touted his executive actions on guns following those tragedies but called for the Senate to act.

Biden called upon Senate Republicans to join Democratic members of Congress to “close loopholes and require background checks to purchase a gun” – such as the “boyfriend” loophole, which refers to a gap in gun legislation that allows partners convicted of domestic violence to purchase a firearm if their partner was not a spouse, didn’t have children with them, or live with them at any point.”

I will do everything in my power to protect the American people from this epidemic of gun violence,” he said. “But it’s time for Congress to act as well.”

The president called on the Senate to pass two pieces of civil rights legislation

Biden recalled meeting Gianna Floyd, the daughter of George Floyd, during her father’s funeral last year, saying how she was right in saying her father “changed the world” in light of the guilty verdict of ex-Minneapolis police officer Derek Chauvin in Floyd’s killing.

While he recognized that “most men and women in uniform wear their badge and serve their communities honorably,” the president urged Americans to come together to “rebuild trust between law enforcement and the people they serve” and “root out systemic racism in our criminal justice system.”

He urged lawmakers to pass the police reform bill named after Floyd by the first anniversary of Floyd’s death on May 25.

The president also cajoled the Senate to pass the John R. Lewis Voting Rights Act, which has already passed in the House.

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More workers just became eligible for unemployment, including those who didn’t return to work over safety concerns

unemployment insurance weekly benefits stimulus checks recession job losses coronavirus pandemic
Carlos Ponce joins a protest in in Miami Springs, Florida, asking senators to continue unemployment benefits past July 31, 2020.

  • On Thursday, the Labor Department expanded eligibility for unemployment benefits.
  • The benefits now include workers who didn’t return to or accept jobs due to COVID safety concerns.
  • But those who quit their jobs over safety concerns aren’t eligible for the expanded benefits.
  • Visit the Business section of Insider for more stories.

The Labor Department expanded unemployment eligibility on Thursday, opening it to workers who didn’t return to work or accept a new position over COVID safety fears.

The new eligibility criteria also extends to school employees who lost work due to closures and people who lost hours or their jobs because of the pandemic.

The move builds on an executive order that President Joe Biden issued in January that widened eligibility for assistance under Pandemic Unemployment Assistance (PUA), which covers those who aren’t eligible for regular unemployment benefits but are unable to work due to the pandemic. 

“There have been tons of workers in this pandemic who’ve been denied benefits because they’ve been offered a job that’s actually not safe,” Heidi Shierholz, the director of policy at the left-leaning Economic Policy Institute, told Insider. 

She added: “One of the key things this does is just makes it very clear that if you get offered a job that is not safe because of COVID risks, you can still get PUA. And I just think that that’s super meaningful.”

Benefits are also retroactive for those who were previously ineligible for PUA, which covers January 27, 2020 and onwards. However, workers who filed after December 27, 2020 can only receive retroactive benefits from December 6 on. 

“This probably helps because there were people falling through the cracks in state unemployment insurance programs,” University of Chicago economist Bruce Meyer told Insider. “And many states were not doing a good job of determining eligibility for unemployment insurance – and many people were not getting the benefits to which they were entitled.” 

Labor Dept. officials told reporters they could not estimate how many people would become newly eligible for jobless assistance. But not every type of worker would benefit from the new guidelines.

“One group who still falls through the cracks are folks who quit their jobs because they were unsafe,” Elizabeth Pancotti, policy director of Employ America, said in an interview. “If you quit your job because you felt unsafe at work, technically you’re not covered by this expansion.”

Millions still unemployed

Thursday’s jobs report showed some slight recovery for unemployment. Weekly jobless claims dropped to 730,000, lower than some economists anticipated. The numbers of Americans with continuing claims – those still filing for unemployment – dropped to 4.4 million.

But millions of Americans remain unemployed with a $300 federal unemployment benefit expiring in mid-March. The official jobless rate stands at 6.3%, though Federal Reserve officials say it is likely near 10% after factoring in certain trends. 

Throughout the pandemic, low-wage workers, women, and workers of color have all been disproportionately impacted by job losses. According to the National Women’s Law Center, women are down over 5.3 million jobs since the pandemic’s onset – and many may have dropped out of the labor force altogether.

Regardless, the updated eligibility will cover a larger swath of workers, while potentially illustrating larger problems with the distribution of unemployment benefits.

“It’s a desperate measure in the face of a failure by state agencies to effectively administer the law,” Meyer said.

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Without a stimulus, unemployment could stay high for a decade

Unemployment insurance filing
A man fills out paperwork while waiting for his number to be called at an unemployment event in Tulsa, Oklahoma on July 15, 2020.

  • The Congressional Budget Office projects that unemployment won’t drop to pre-pandemic levels for a decade.
  • But an additional stimulus could have a major impact on unemployment.
  • Economists say the projections show the need for more relief.
  • Visit Business Insider’s homepage for more stories.

The US unemployment rate may not reach pre-pandemic levels for the rest of the decade without additional stimulus from the federal government, according to projections from the nonpartisan Congressional Budget Office (CBO). 

As Insider’s Joseph Zeballos-Roig reported, that analysis sees the unemployment rate falling to 5.7% this year, and 5% in 2022. It’s projected to hit 4% around 2025. In February 2020, before the economic shock from the coronavirus pandemic, the unemployment rate was 3.5%. 

Overall, the CBO projects that the total number of people employed in the US will reach pre-pandemic levels in 2024. The CBO projections also see GDP returning to pre-pandemic levels in mid-2021, with real GDP growing 3.7% this year.

But those projections don’t take into account any additional government spending on the pandemic; as Zeballos-Roig reported, the analysis itself could come into play during stimulus negotiations.

President Biden’s proposed stimulus could have a major impact on unemployment

David Kelly, the chief global strategist at JPMorgan Funds, previously wrote that President Joe Biden’s stimulus plan could drastically lower unemployment. In a “conservative” simulation run by JPMorgan of the $1.9 trillion relief package, which assumed that the ultimate cost was $1.5 trillion and $1.2 trillion was dispersed by September, unemployment dipped below 5% and “the Biden rescue plan could boost nominal GDP growth to 11.4% year-over-year by the end of this year.”

In a note on Monday, Kelly further emphasized the impact that the stimulus could have on unemployment levels, especially as GDP levels grow.

“A statistical model of the relationship between real GDP growth and employment suggests that this could boost payroll employment by close to 10 million jobs by the second quarter of 2022,” Kelly writes. But, he added: “It needs to be emphasized, of course, that this historical relationship is not that strong a guide in a very rapidly growing economy and that the inevitable delays in restarting and setting up businesses could delay this hiring.”

Another factor in shrinking unemployment rates is the number of people of working age actively seeking employment: During the pandemic, fewer people have immigrated to the US, and millions of Americans have stopped looking for work, meaning we can assume “that the labor force by the second quarter of 2022 may be no higher than it was in the fourth quarter of 2019.”

That crashing labor force – combined with quick jobs growth – could lead to a quickly sinking unemployment rate. For instance, Kelly said that adding 10 million jobs and four million people to the labor force could bring the unemployment rate to 2.8%.

But a hot jobs market like that, where wages are growing and it’s harder to hire people, could also bring back in people like retirees and new immigrants.

As Kelly writes, “the exercise is useful because it re-emphasizes the potential for the combination of pandemic recovery and massive fiscal stimulus to overheat the economy.”

Some economists agree, saying that the CBO projections underscore the need for more stimulus.

“The unemployment rate masks exits from the labor force – especially women who are caring for children who often are not in school,” Gabriel Mathy, an assistant professor of economics at American University, said in a statement. “For those people that are not counted in the unemployment statistics, we’re going to need to run the economy hot.” 

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