Unemployment Rolls Shrinking Faster in States That Opted Out of Enhanced Federal Benefits

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People who lost their jobs wait in line to file for unemployment following an outbreak of the coronavirus, at an Arkansas Workforce Center in Fort Smith, Ark., April 6, 2020. (Nick Oxford/Reuters)

The number of people receiving unemployment benefits is falling faster in states that have opted out of extended federal unemployment assistance, the Wall Street Journal reported on Monday.

States that announced an end to enhanced federal unemployment benefits in June saw a 13.8 percent drop in residents receiving benefits from mid-May through June 12, according to an analysis by Jefferies LLC. States announcing an end to federal unemployment in July saw a 10 percent decline in residents receiving state benefits over the same period, while states ending federal unemployment in September recorded a 5.7 percent decline.

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Businesses in states with substantial unemployment benefits have struggled to attract low-skill laborers as they ramp up amid a consumption boom brought on by the end of pandemic restrictions.

“You’re starting to see a response to these programs ending,” Jefferies chief financial economist told the Journal. “Employers were having to compete with the government handing out money, and that makes it very hard to attract workers.”

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Pandemic aid packages passed by Congress have included federal unemployment benefits of $300 per week, and are set to expire in September. Democrats have touted the benefits as necessary amid unprecedented business closures, while Republicans have called to cease federal benefits before September in order to bring Americans back into the workforce.

In all, 22 states have announced that they will opt out of federal unemployment. Missouri governor Mike Parson said the continuation of federal benefits “worsened the workforce issues we are facing,” in comments to the Journal.

Texas governor Greg Abbott announced the change in May.

““The Texas economy is booming and employers are hiring in communities throughout the state,” Abbott said at the time. “According to the Texas Workforce Commission, the number of job openings in Texas is almost identical to the number of Texans who are receiving unemployment benefits.”

Indiana governor Eric Holcombe ended federal benefits in his state on June 19, however an Indiana judge ordered the state to resume allowing those benefits following a lawsuit by unemployed residents. Marion Superior Court judge John Hanley said the plaintiffs have a “reasonable likelihood of success” in their suit.

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