Louisiana is poised to become the first Democratic-led state to end unemployment benefits

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Louisiana Gov. John Bel Edwards. Gerald Herbert/AP
  • Half of the states in the country - all GOP-led - have opted out of federal unemployment benefits early.

  • But Louisiana, which has a Democratic governor, may cut off benefits at the end of July.

  • The move would represent a shift in the partisan approach to cutting off the federal aid.

  • See more stories on Insider's business page.

Half of all states in the country have opted out of federal unemployment benefits early, which is set to impact an estimated 4 million workers and cost states' economies $12 billion. Four states ended their benefits on Saturday.

All of those 25 states are helmed by GOP governors, but a new wrinkle in the unemployment story has emerged: Louisiana, led by a Democrat, seems poised to end its participation in federal unemployment benefits at the end of July.

Local news outlet WAFB reported that Gov. John Bel Edwards hasn't made a decision yet, but may pull the state out of benefits before they expire in September. According to WWLTV, Louisiana lawmakers have essentially issued a legislative ultimatum to Edwards. The GOP-dominated legislature passed a bill introduced by a Democratic representative that would increase the state's unemployment benefits by $28 weekly - but only if the governor ends the state's participation in federal benefits by July 31.

States need to notify the Department of Labor at least 30 days before they intend to end federal unemployment benefits. That means that if Edwards decides to opt out, he still has a little bit of leeway in terms of timing.

Per WWLTV, the governor had said he planned on ending benefits in early August, when school starts up again.

Governors opting out of federal unemployment benefits early have cited labor market tightness as a primary driver for their decision; they argue that the beefed-up benefits are keeping workers out of the workforce, an argument propelled by the weak jobs report in April. Insider's Andy Kiersz and Ben Winck found that increased unemployment benefits were competitive with wages in most states. And, as Insider's Ayelet Sheffey reported, Bank of America found that benefits were higher than average weekly earnings for leisure and hospitality workers; both BofA and Goldman found that ending benefits could help ease labor shortages.

However, May's jobs report showed that workers returning even with increased benefits still in place. Many unemployed workers are still struggling to find work that fits their skill set - indicating that a labor mismatch could also be driving tightness. Some are also rethinking work altogether, leading to a reckoning with work that faces down a fiscal cliff in September, as pandemic-era relief programs draw to a close.

But Louisiana closing up shop on federal unemployment benefits would represent a significant departure from solely GOP-led states opting out. JPMorgan recently said that "politics, rather than economics" was driving states' decisions to cut off benefits.

The Biden administration has signaled that it won't attempt to prevent states from pulling the plug on federal unemployment benefits. President Joe Biden said earlier this month that it "makes sense" for the federal payments to expire in September.

Are you unemployed and have a story you want to share? Email this reporter at jkaplan@insider.com.

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