Republican governors are canceling unemployment, but Biden's Labor Department could step in and provide some of it instead

·5 min read
GettyImages protest dc covid-19 stimulus relief
Demonstrators rally near the Capitol Hill home of then-Senate Majority Leader Mitch McConnell to call for the extension of unemployment benefits on July 22. Tom Williams/CQ-Roll Call Inc via Getty Images
  • More and more GOP-led states are announcing they're opting out of federal unemployment benefits.

  • That move could affect hundreds of thousands of people receiving benefits.

  • A think tank sent the Labor Department a memo about providing PUA, and the agency is reviewing it.

  • See more stories on Insider's business page.

After April's weak jobs report, more than a dozen GOP-led states have announced that they'll be pulling out of federal unemployment benefits, with governors saying they want to urge people to get back to work.

"Federal pandemic-related unemployment benefit programs initially provided displaced Iowans with crucial assistance when the pandemic began," Iowa Gov. Kim Reynolds said in her announcement that the state would pull out of benefits on June 12. "But now that our businesses and schools have reopened, these payments are discouraging people from returning to work."

The National Employment Law Project, a progressive think tank, has some ideas for how workers cut off by their states could still receive benefits.

It sent the Department of Labor a letter with potential options for getting that funding to workers, and noted that the 2020 CARES Act stipulates that the Labor Department disburse Pandemic Unemployment Assistance to everyone eligible, which includes gig workers. So while states could cut the additional $300 in benefits, the Labor Department might have to ensure that at least some federal assistance remains intact.

According to a report from The Century Foundation, at least 895,000 people will be affected by the cuts already announced - and more are likely coming. The foundation's report captured 12 states; a thirteenth, South Dakota, has since announced that it'll be pausing benefits on June 26.

Some will lose benefits completely when these orders take effect. Millions have received extended benefits, and are newly eligible under the PUA program - and ones in affected states could be fully cut off from those. According to a Washington Post analysis, more than 600,000 Americans could lose all of their benefits. Others will see their incomes plummet to their state's regular unemployment benefits, no longer beefed up by the additional $300.

"The way that the law, the CARES Act, is written, it requires DOL to provide Pandemic Unemployment Assistance," Steve Gray, senior counsel on NELP's Social Insurance Team, told Insider. He said it's required to provide PUA for as long as funds are available, which is currently September. He added: "They've got a sort of statutory duty to do that."

The NELP's suggestions: The Labor Department could require that states continue to pay PUA. Alternatively, it could create agreements with states to provide PUA for individuals in other states where benefits have been rolled back - similar to hurricane-relief measures.

Sen. Bernie Sanders wrote on Twitter on Thursday that he sent a letter to Labor Secretary Marty Walsh reminding him of the department's mandate to provide PUA assistance and calling for the department to ensure benefits to Americans in states pulling back.

"It is critical that the Department of Labor does everything in its power to ensure that jobless Americans continue to receive this aid as the law intended," Sanders wrote.

The Department of Labor told Insider it has received the NELP's memo and is reviewing it.

Bernie Sanders
Sen. Bernie Sanders. Jim Watson/Pool via REUTERS

'These actions are based on the misguided belief that jobless benefits are creating labor shortages'

Groups like the Chamber of Commerce have advocated ending the extended benefits, and, as Forbes' Andrew Solender reported, at least 10 Senate Republicans are throwing their support behind a bill to end benefits in June, rather than September. Democratic Sen. Joe Manchin has said he does not support extending the measure past September, when it's set to expire.

As TCF notes, the move to pull out of federal benefits will likely disproportionately affect Black workers, who make up a higher percentage of unemployment-insurance recipients in at least three of the states.

"These actions are based on the misguided belief that jobless benefits are creating labor shortages, but we know this to be untrue as research has shown more generous unemployment-insurance benefits has not reduced labor supply," Rep. Don Beyer (D-Virginia) said in a comment to Insider. "It is the pandemic, not the rescue, that is causing labor shortages."

Some progressive lawmakers had already called for wider unemployment reforms, citing the number of Americans who have used PUA as one reason to expand eligibility. In his latest economic package, President Joe Biden pledged to work on reforming unemployment insurance, though the promise did not come with any money or specifics.

One of those legislators calling for reforms was top Democrat Sen. Ron Wyden of Oregon, who has continually pushed for expanded unemployment benefits throughout the pandemic.

"The Labor Department must explore all options to keep these workers from losing their income," Wyden said in a comment to Insider. "States enter into agreements with the Labor Department in terms of administering these benefits, and there are serious questions as to whether they can just back out. Mothers without child care are not going to be back on the job in just a few weeks' time, and they shouldn't face financial ruin for living in states run by Republicans."

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