State-wide cuts in unemployment benefits amid pandemic

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State-wide cuts in unemployment benefits amid pandemic

WASHINGTON - The 25 U.S. states calling an early halt to national unemployment benefits have lost more of the jobs lost during the crisis than other states, possibly limiting how much of a dent ending the weekly $300 payments will make in the ongoing battle to fill pandemic jobs.

Republicans took aim at expanding the Benefits, which were first extended by Congress in a massive relief package last year and later approved, arguing that they discourage people from returning to work and are no longer needed given the easing pandemic. As of Saturday the payments are set up in four Republican states, 21 others following suit until early July.

Business owners are struggling in Missouri not because of COVID -- 19, but because of federal employment shortages resulting from these excessive unemployment programs, the Governor Mike Parson said last month as he announced a June 12 cutoff to the payments in his state. In other cases, companies that are not eligible to bring on unemployment insurance, only receive a temporary payment.

But in Missouri, as in the other states cutting the plug on benefits early, the margin to increase local labor supply might be thinning.

The state has already lost about 90% of the jobs that it lost last year as the spread of the coronavirus devastated the U.S. economy. As of April, when the payroll jobs topped 2.94 million, there were only 16,000 more working Missourians and about 93,000 now receiving unemployment benefits from the pandemic. This pool includes the former contractors and solo workers with benefits during the crisis, and it is unclear how many will shift to old payroll jobs or renew conventional ones.

Overall, the April : data from the U.S. Bureau of Labor Statistics, the latest available, showed that the 25 states who planned to retire benefit early recovered about 80% of the jobs lost during the crisis versus a 46% recovery rate in the rest of the nation.

About 2.4 million more people in states that stopped the benefits early or no longer looking for work than before the pandemic, against almost 7.5 million available payroll jobs still missing nationwide and 9.3 million open jobs in April.

The numbers suggest that the job market may remain locked and slow - for months amid a gulf between the workers needed as the economy reopens and the willingness of people to work at the offered wages, or unable to take jobs at all given issues like child care that were intensified by the pandemic.

The situation has led to a confused run of statistics: currently there is approximately one job opening for every healthy person in the nation, something usually associated with very unemployed labor markets. Wages are rising. Yet there are about 3 Million more people unemployed than before the pandemic and about 3.5 million have left the job market altogether.

The end of benefits in half of the country has set up an experiment around how much the weekly $300 is influencing behavior and how many more people can be coaxed back into the workforce. The supplement encouraged some people to work more than they would while they are working.

Even in states where the benefits are ending, the situation is difficult to read. On a nonseasonally adjusted basis, continuing claims for unemployment insurance fell nationwide for the week ending May 29 by approximately 5%; the decline was about the same in states that began limiting benefits early and those that are not. On June 12, the state's continued claims in Alaska, Iowa, Mississippi and Missouri — the four states ending continuous benefits - increased 1.8%.

Jed Kolko, Chief Economist at Indeed Hiring Lab, said state-by-state data showed a modest, brief increase in job searches as states announced that benefits would end late, but it has tended to fade.

If the federal benefits were slow-moving job seekers, then, relative to the national trend, we would expect search activity to increase in states where those benefits are starting sooner, he wrote. Instead, job searches in states ending benefits this week and next are below the national average, and it is unclear why.

At least in one regional city, local policy can end up pulling against the state.

Officials in Missouri are discussing a plan to make up the benefits that about 9,600 residents will lose if the federal unemployment supplement stops being used. Source of money: other federal funds - provided under the Biden administration's $1.9 trillion American Rescue Plan relief package, which is estimated to send $110 billion to local governments with broad discretion for them to use as needed.

The idea, which needs to be approved by local elected officials, could restore the lost benefits for some residents by early July.

Families are going to get affected next week and hopefully they can weather a week or two in St. Louis, while the city's mayor Richard von Glahn and the city's residents decide whether to spend about $35 million of the available $517 million in federal emergency money to make up for the lost unemployment payments, said Tishaura Jones, Policy Director of Missouri Jobs with Justice.

Restoring the market to its depressed normal, with ultra-low unemployment and greater gains for many workers is the vital missing link in a U.S. economic recovery, where the growth in overall output has outpaced jobs recovery. It's a priority for president Joe Biden's administration and the driving logic behind the Federal Reserve's intention to keep financial policy in one-stop monetary action until the job markets are healed.

The slow rollout of coronavirus vaccination programs this year and the broad easing of restrictions on commerce and movement seemed to set the ground for just that, as companies intended to increase their headcounts to meet a surge in new business.

However, after a jump of nearly 1 million new jobs in March, hiring slowed in April before picking up in May - even as the number of job postings reached record highs. Withdrawing unemployment benefits as a result has increased the calls.

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