Six states have now announced that they will stop participating in the federal government’s supplemental pandemic unemployment program early in an effort to get people back to work.
On Tuesday, Iowa became the most recent state to announce a premature end to the benefits program. The Republican governors of Mississippi, Alabama, Arkansas, South Carolina, North Dakota, and Montana have also notified their labor forces that payments will be cut off in the coming weeks.
Iowa Gov. Kim Reynolds said that while the pandemic-related unemployment benefit programs initially provided “crucial assistance” at the outset of the health crisis, they are now discouraging some Iowans from finding work, even though there are jobs available. Reynolds said that the benefits would expire on June 12.
“Our unemployment rate is at 3.7%, vaccines are available to anyone who wants one, and we have more jobs available than unemployed people,” the governor said. “Regular unemployment benefits will remain available, as they did before the pandemic, but it’s time for everyone who can to get back to work.”
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The program provides the unemployed $300 per week in federal payments, which stacks on top of the amount that states provide in unemployment. While the unemployment compensation total varies by state, the national average prior to the pandemic was $387 per week, meaning that unemployed people in America are now netting $687 on average.
There have been concerns that people are not taking jobs because they make more money being unemployed than employed. When compared to a job with a 40-hour workweek, the $687-per-month figure equates to a $17.17 hourly wage, more than double the federal minimum wage.
While the economy has been growing at a quick clip as businesses continue to reopen and more vaccines are distributed, job applications are lagging behind. The number of job openings hit the highest level on record in March, 8.1 million, the Bureau of Labor Statistics reported Tuesday, up 40% on the year. Hires, though, were up only 17%.
The sharp rise in job openings, coupled with the lack of labor-force participation, has also generated inflationary fears. Because employers have had to compete with the federal government’s unemployment pay, many have had to hike wages, which can lead to higher prices in order to recoup lost revenue.
The federal government’s supplemental pandemic unemployment program is set to sunset on Sept. 6 for the states that don’t exit the program early. Governors of all of the states that have announced an early end have given residents some time to prepare and search for work before cutting the federal benefits.
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The federal benefits are set to expire on June 12 in Mississippi, June 19 in Alabama and North Dakota, June 26 in Arkansas, and June 30 in South Carolina. Montana is withdrawing on June 27 and will also offer $1,200 bonuses for residents who return to work.
