States to end unemployment benefits for more than 400,000 workers
Approximately 417,000 workers will lose federal supplemental unemployment benefits this weekend as eight states withdraw from the federal program nearly three months before it officially expires.
Effective Saturday, workers in Alabama, Idaho, Indiana, Nebraska, New Hampshire, North Dakota, West Virginia, and Wyoming will no longer receive the additional $300 per week that is proven a critical safety net.
Republican governors in 25 states have decided to turn down federal funds provided by the American Rescue Plan Act ahead of their official expiration on September 6, which will affect about 4 million total recipients. Democratic President Joe Biden has approved the cutoff, with the White House indicating it had no objection to the states’ action, which will plunge the unemployed into destitution.
In addition to the Federal Pandemic Unemployment Compensation program, which provides the unemployed with $300 a week on top of their regular benefits, the changes will affect workers who have reached the limit of state unemployment benefits, seasonal workers and others who do not normally qualify for state unemployment benefits, and those who rely on freelance work for additional income.
Four states—Alaska, Iowa, Mississippi and Missouri—cut off federal assistance last Saturday, affecting about 291,000 workers. Two weeks from now, several million workers will be cut off from benefits in Arkansas, Florida, Georgia, Ohio, South Carolina, South Dakota, Texas, and Utah. Texas, Florida, Ohio and Georgia are the four most populous states among the 25 where Republican-controlled state governments are terminating federal benefits.
Republican governors and corporate shills have vociferously denounced the enhanced benefits as paying people to stay home, thereby creating labor shortages and making it difficult for businesses to hire.
Missouri Governor Mike Parson said the benefits were “excessive” and aggravated workforce issues when he announced his state would end its participation.
“From conversations with business owners across the state, we know that they are struggling not because of COVID-19 but because of labor shortages resulting from these excessive federal unemployment programs,” Parson said.
The truth is that workers face numerous challenges preventing them from returning to work. Many are concerned about ongoing COVID-19 health risks. Parents may still not be able to return to work if child care centers or schools have not yet reopened. Additionally, about one in five unemployed workers are still laid off temporarily and waiting to get recalled by their former employer.
Others would like to work but struggle to find a job. Although the economy added more than half a million jobs last month, Labor Department data shows there were roughly 7.9 million fewer jobs than before the pandemic. Most jobs added in recent months are low-wage positions. According to the Labor Department, about 4 million US workers quit their jobs in April to search for better pay.
Approximately 15 million Americans (1 in 10 workers) are currently receiving some form of federal unemployment benefits, with roughly 6 million workers, including gig workers and independent contractors, receiving unemployment benefits only through the federal programs created in response to the pandemic.
State-level unemployment benefits generally replace only half a worker’s wages before he or she was laid off. University of Chicago economist Peter Ganong estimates that about 42 percent of workers are paid as much or more as those lost wages with the addition of the $300 a week supplement.
Indiana residents filed suit against Governor Eric Holcomb in state court on Monday, alleging his office “violated the clear mandates of Indiana’s unemployment statute—to secure all rights and benefits available for unemployed individuals.”
Some of the workers, who are unnamed, state they cannot return to work immediately and need the federal assistance to make ends meet. One worker is a bus driver with three children whose work would not resume until the new school year in the fall. Another just signed a six-month lease and said he’ll likely face evection without the benefits.
The lead plaintiff is a certified nursing assistant who cannot work because she has a baby and local day care facilities are full. She says she receives $449 per week in federal benefits, which will stop on June 19 for her and about 177,000 other Indiana residents unless the court issues an injunction. Without the federal aid “her family will struggle to pay for food and other living expenses,” the lawsuit says.
In a June 4 speech on last month’s jobs report, President Biden claimed that “it makes sense” for supplemental unemployment benefits to expire in September, but he indicated nothing would be done to help workers in states withdrawing from the program early. White House press secretary Jen Psaki told reporters Republican governors “had every right” to terminate the benefits now rather than three months from now.
The National Employment Law Project and Senate Budget Chair Bernie Sanders have said federal law requires the Biden administration to pay workers benefits if their states refuse to do so, but Biden has given the governors a green light for the cutoffs. Sanders has done nothing but issue a statement, as he works closely with the White House on a budget resolution.
Of course, it is not the politicians or the wealthy who will be hurt by an end to the benefits. While workers are being compelled by the threat of starvation to take whatever job they can, the Federal Reserve is spending seven times as much purchasing bonds every month than is spent monthly on unemployment benefits for millions.
Meanwhile, a nearly unprecedented rise in the prices for necessities is making it increasingly difficult for workers to get by. Last month, the US inflation rate reached a 13-year high of 5 percent. At the same time, workers have seen their real wages decline by more than 3 percent within the past year.
For millions, cutting off unemployment benefits is tantamount to taking a knife to an inflatable life raft and leaving people to drown. Supplemental unemployment benefits have been an essential support for millions of workers and families throughout the pandemic.
Jobless Claims Unexpectedly Rise to 412,000
New claims for unemployment benefits unexpectedly rose last week, the first such setback for the labor market since April.
The Labor Department said Thursday that jobless claims rose 37,000 from the week before to a seasonally adjusted 412,000. The number of jobless claims generally reflects the pace of layoffs.
The unadjusted number of initial claims under state programs totaled 402,352 in the week ending June 12, an increase of 37,174 or 10.2 percent from the previous week. The seasonal factors had expected a fractional decline from the previous week. In addition, for the week ending June 12, 52 states reported 118,025 initial claims for Pandemic Unemployment Assistance. So total new claims, unadjusted, rose 19 percent to just over 520,000.
Economists had expected a decline to 360,000 after the 376,000 initially reported a week earlier. The prior report was revised down by 1,000.
Many Americans are hanging back from working because, for a very large share of those unemployed, supplemental federal jobless benefits, on top of regular state unemployment aid, pay them more than their old jobs did. Others are contending with health and child care issues related to COVID-19 and, in some cases, with career uncertainty after the recession wiped out many jobs for good. Some who have lost work during the pandemic have decided to retire while others have rethought their career choices after working from home or being out of work during the pandemic.
Many states, though, are set to begin dropping the supplemental federal jobless aid this month. That will likely prompt many Americans to return to work over the coming weeks and months. The enhanced benefits, which pay $300 a week on top of an average $320 in state benefits, are set to expire nationwide in September.
With mask orders and capacity limits being lifted, vaccinations up, and more consumers venturing out to spend — on restaurant meals, airline fares, movie tickets, and store purchases — the economy is rapidly recovering from the recession. All that renewed spending—helped along by stimulus payments that went out in March and April—has fueled customer demand and led many companies to seek new workers, often at higher wages, and avoid layoffs. Consumers are shifting some of their spending from household goods to long-neglected services and vacations.
The speed of the rebound from the recession has caught many businesses off guard and touched off a scramble to hire. In May, employers added a less-than-expected 559,000 jobs, evidence that many companies are struggling to find enough workers as the economy recovers faster than expected. In April, companies posted over 9 million job openings, a record high and a jump of 12 percent from March.
Fiscal stimulus and loose monetary policy, however, are fueling inflation. As well, the sudden lurches in the economy have caused bottlenecks in the supply chain, triggering shortages and skyrocketing prices for things like used cars, lumber, and grains. Those rising prices are taking their toll and squeezing households. Retail spending actually fell in May, homebuilding is stalling, gasoline is at multi-year highs, and inflation-adjusted incomes have been declining as wage gains get swamped by larger rises in the cost of living.
“It turns out it’s a heck of a lot easier to create demand than it is to, you know, to bring supply back up to snuff,” Fed chair Jerome Powell said in a press conference at the conclusion of the Federal Open Market Committee’s two-day meeting Wednesday.
Despite the higher than expected inflation, Powell said the Fed intends to keep rates low for as far as the eye can see. The Biden administration continues to push for billions of dollars of more spending, which many economists think will add to the inflationary pressures without substantially improving the performance of the economy. On Wednesday, the economic projections of Fed officials showed that they expect inflation for the full year to run a full percentage point higher than they did in March while expectations for economic growth improved by just half a point and unemployment expectations did not improve at all.
But many economists expect hiring to catch up with demand in the coming months, especially as federal unemployment aid programs end and more people pursue jobs. They note that the economy still has 7.6 million fewer jobs than it did before the pandemic struck.
The rapid rollout of vaccines has brought the number of new confirmed COVID-19 cases down to an average of just over 12,000, from around 250,000 a day in early January.
Though jobless claims have tumbled since the start of 2021, when they exceeded 900,000, they remain high by historical standards. Before the pandemic paralyzed the economy in March 2020, unemployment applications were running at about 220,000 a week.
In Thursday’s report, the government said a total of 3.5 million Americans were continuing to collect traditional state unemployment benefits after their initial claims in the week ending June 5, up by just 1,000 from the week before. The total number of continued weeks claimed for benefits in all programs for the week ending May 29—the total gets reported with a delay of three weeks—was 14,828,950, a decrease of 559,873 from the previous week.
Claims are volatile so economists like to look to the four-week average to get a more accurate view of the labor market. The four-week average of initial claims fell 8,000 to 395,000. The average of continuing claims, reported with a one-week delay, fell to 3,603,750, a decrease of 55,000 from the previous week’s revised average. This is the lowest level for this average since March 21, 2020 when it was 2,071,750.
Texas Dedicates $250 Million to Build Border Wall
The State of Texas announced the dedication of $250 million to a disaster fund to build wall systems along its border with Mexico. The $250 million is being transferred from appropriated funds from the Texas Department of Criminal Justice.
“Though securing the international border and protecting the life and property of its citizens surrounding that border is the duty of the federal government, the current administration has shown time and time again an unwillingness to embrace this fundamental responsibility,” a letter to TDCJ Executive Director Bryan Collier signed by Texas Governor Greg Abbott, Lt. Governor Dan Patrick, House Speaker Dade Phelan, Senate Finance Committee Chair Jane Nelson, and House Appropriations Chair Greg Bonnen on Wednesday stated. “As noted in the disaster declaration, Texas has invested a significant amount of its own resources to take action where the federal government has failed.”
During a press conference in Austin on Wednesday, Abbott said Texas is stepping up to address the humanitarian crisis being faced by Texans living along the Mexican border.
“I will tell you this,” Abbott said while addressing the Texas border crisis, “the federal government is spending seemingly, all of its resources concerning the border on the people who are trying to enter into the state of Texas.”
“I’m focused on the humanitarian crisis that Texans are suffering through,” he continued. “Texans on the border are suffering through a humanitarian crisis by having their lives disrupted with guns and gangs and being riddled with crime. As Texans, we have a responsibility as leaders in this state, to step up and address their humanitarian crisis in that is what began today.”
Texas State Senator Jane Nelson (R-Flower Mound) added that the Legislative Budget Board has the authority under Article 9, Section 14.04 to make the transfer during a disaster declaration. At the request of county judges along the border, Governor Abbott made such a declaration earlier this month.
Abbott called the $250 million transfer a “down payment” on what he anticipates to be hundreds of miles of new border walls to be built on land already owned by the State or private property where owners volunteer their land for this purpose.
“My belief based upon conversations that I’ve already had is that the combination of state land, as well as volunteer land, will yield hundreds of miles to build a border wall in Texas,” Abbott explained.
Texas Lt. Governor Dan Patrick (R) said that up to three million people could illegally cross the border into the United States this year including hundreds of thousands who are never apprehended. He called the governor’s letter to President Joe Biden demanding the return of land to Texas the “most consequential letter signed by any governor in modern history.”
“This document will go down as one of the most important documents in the history of Texas,” Patrick stated. “Because it’s reclaiming our land, our border, our country, our state, for the people of Texas and America.”
House Speaker Dade Phelan (R-Orange) also praised the governor’s leadership and ingenuity for “finding a Texas solution to a Washington, D.C. problem.”
“This is a legal crisis. This is a security crisis. This is a humanitarian crisis,” Phelan said. “These are children and families being smuggled across the border. “These are drug cartels, bringing in weapons that end up on the streets of not just Texas but this entire country.”
Governor Abbott declared this program to build a Texas border wall begins today. “This program is officially funded in the State of Texas,” he declared with the signing of the order to transfer the $250 million down payment.
The governor also announced a website, BorderWall.Texas.gov, where people can learn about the plans and contribute money to help build the wall. “Many have already sent checks to the State of Texas for this purpose and many more have a desire to do so,” the governor said. “This provides a donation site, as well as the site we can find out more information about what the process is about building the border wall.”
“The Biden Administration has abandoned its responsibility to apply federal law to secure the border and to enforce the immigration laws, and Texans are suffering as a consequence of that neglect by the Biden administration,” Abbott said in conclusion. “In the federal government’s absence, Texas is stepping up to get the job done.”
“We will build a wall. We will secure the border. but most importantly, we will restore safety to the citizens who live in the Lone Star State,” the governor said.
Bob Price serves as associate editor and senior news contributor for the Breitbart Texas-Border team. He is an original member of the Breitbart Texas team. Price is a regular panelist on Fox 26 Houston’s What’s Your Point? Sunday-morning talk show. Follow him on Twitter @BobPriceBBTX and Face
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