22 states who cut their extra jobless benefits saw their jobless rates fall at a faster pace. This highly suggests that removing the extra unemployment benefits set by the federal government can increase the job rate.
Federal Pandemic Aid
Federal pandemic aid bills boosted unemployment payments by $300 per person a week. This benefit aims to provide additional funding for households in the event getting a job during the pandemic is out of the question.
This doesn’t only cover the lack of jobs, but also considers workers that could not leave home because of young children, or a lack of safety and transportation means to get to work. The extra unemployment aid will supposedly last until September this year, but states can opt-out of the program depending on their condition.
However, the US economy jumped right out of the gates this year as businesses opened left and right. Manufacturing went back roaring while retail and food outlets reopened and started accepting customers. It came to a point where many job openings remain unfilled as workers are becoming more selective in applying for jobs.
Missouri’s Jobless Rates Are Falling Down
Missouri Governor Mike Parson said that the benefits helped a lot during the height of the coronavirus pandemic. However, continuing them now is hurting the need for workers.
Like other Republican governors, Parson informed the federal government about Missouri’s plan to end the extra jobless benefits. Currently, the state enjoys a 4.2% jobless rate. In contrast, the national average is higher at 5.8%.
Missouri removed the extra jobless payments last June 12, one of four states that decided to do so. Seven states followed the four with a June 19 deadline. For this weekend, 10 more states will drop the extra benefits, while another four will cut off by July 10.
Jobless Rates Down
The announced cuts resulted in a spike of new workers. Extra unemployment actual payments fell by 13.8% over the weekend of June 12. Meanwhile, states that will end their benefits by July reported a 10% decline in payments. For states still planning to complete the September cut-off period, the decline only reached 5/7%.
Anita Markowska, Jefferies chief financial economist, says that the effect is showing. “You’re starting to see a response to these programs ending. Employers were having to compete with the government handing out money, and that makes it very hard to attract workers,” she noted.
Democrats Point Out Other Factors
Meanwhile, some Democrats and economists say that other things hamper workers from getting back to work. The lack of child care and fear of getting infected with COVID-19 are among the concerns. However, the case in Missouri showed that people are getting back to work when they know the extra benefits are running out.
Missouri job seekers are now attending job markets and showing up for interviews. For example, the Midas hotel chain already processed its new hires. Previously, many inquiries will come up but very few will show up for interviews.
In addition, some of those hired didn’t show up for their first day. Meanwhile, other Midas locations in states where extra unemployment benefits remain in force are still having trouble hiring workers.
Watch the TODAY show reporting that 4 states cut off unemployment benefits early, with other states to follow:
Do you agree that the extra job benefits should stop now considering the US needs to hire more workers? If not, what is the extra incentive for considering there are lots of jobs out there?
Tell us what you think about the jobless rates. Share your thoughts below.
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