WH advisor: No strong evidence unemployment benefits are 'pulling people out of the labor force'

·2 min read

One White House official is pushing back on concerns that federal unemployment benefits are causing a labor shortage. 

"As the economy gets back up and running, we need to make sure that the unemployment insurance system does what it's designed to do, which is support people during periods of unemployment," Heather Boushey, a member of the White House’s Council of Economic Advisers, told Yahoo Finance Live (video above). "So far we have not seen strong evidence that this is having a significant effect of pulling people out of the labor force. People know that it's temporary."

Boushey's message comes as 25 Republican-led states and Democrat-led Louisiana have eliminated or plan to eliminate the pandemic-era jobless programs this month or early next month, well before their federal expiration in September.

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In addition to the extra $300 in weekly benefits, 20 of the states also have opted out of or intend to opt out of the Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) programs. PUA provides benefits to workers like contractors who don’t otherwise qualify for regular unemployment insurance. PEUC provides additional weeks of benefits.

In those 26 states, more than 4 million workers will see their benefits slashed by at least $1,200 a month in June or early July, losing a total of $22.1 billion in benefits, according to estimates by the Century Foundation.

The expanded unemployment benefits have given workers more time to search for a job and find the right match, according to Boushey. The additional weekly benefit is "a key reason why the economy is recovering as it is now," she said.

WASHINGTON, DC - MARCH 24: Council of Economic Advisers member Heather Bousey talks with reporters in the Brady Press Briefing Room at the White House on March 24, 2021 in Washington, DC. To mark Equal Pay Day, Boushey and council Chair Cecilia Rouse  highlighted the Biden Administration's efforts toward pay equity between women and men. (Photo by Chip Somodevilla/Getty Images)
Council of Economic Advisers member Heather Bousey talks with reporters in the Brady Press Briefing Room at the White House on March 24, 2021 in Washington, DC. (Photo by Chip Somodevilla/Getty Images)

The unemployment rate in May was 5.8%, down from its pandemic peak of 14.8% in April 2020. Still, 7.6 million jobs have yet to be recovered for the economy to return to pre-pandemic levels.

During the pandemic, many essential workers were not protected on the job and weren't paid enough, potentially leading some to rethink their jobs or industry, according to Boushey.

"We need to make sure that workers are safe, that they are protected, and that they're paid a decent wage," she said. "People are seeing the places where they're valued and the places where perhaps they need to be valued more."

Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova

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