Financial Associated Press (Shanghai, editor Bian Chun) News, missouri and Tennessee in the United States recently announced that they will end all unemployment benefits related to the new crown virus pandemic provided by the federal government this summer. The extra money, they argue, will discourage the unemployed from rejoining the workforce and make it harder for employers to recruit workers.
Announcing the decision Tuesday, Missouri Gov. Mike Parson said, "While these benefits provide supplemental financial assistance during the covid-19 peak, they are inherently temporary and will exacerbate the workforce problems we face if they continue." ”
The official U.S. non-farm payrolls report on Friday was a surprise, with employment rising by just 266,000 in April, or about a quarter of what was expected.
Critics blame U.S. President Joe Biden's unemployment benefit extension program as part of the Biden administration's $1.9 trillion bailout package, which Congress passed earlier this year by a slight divide.
The U.S. Chamber of Commerce echoed that view, calling on Friday for a nationwide end to unemployment assistance. Republicans have also criticized the poor non-farm payrolls figures because Americans received checks from the coronavirus stimulus package.
Previously, some Republican governors had eliminated additional subsidies to use the funds elsewhere. Those states, which are Alabama, Arkansas, Mississippi, Montana and South Carolina, see these benefits as the cause of the slowdown in hiring.
This view remains controversial
"Cutting pandemic grants not only hurts workers who depend on federal benefits because they can't find or can't work, but it also drags down the economy because the benefit of this [federal benefit] is stimulus spending," wrote Josh Bivens and Heidi Shierholz, analysts at the economic policy institute, a left-leaning think tank.
Fed policymakers, who have sought to avoid partisan debate, noted tuesday that there are other factors that keep workers on the sidelines besides unemployment benefits.
"People do want to go back to work, they're willing to do that." Fed Governor Lael Brainard said Tuesday, adding that the suspension meant many people needed to care for their children and couldn't find work.
At the same time, there are still concerns about the coronavirus that claims 700 lives every day. Brainard noted that when the employment report data was collected in April, only a quarter of working-age Americans were fully vaccinated.
It's worth noting that these benefits — including an additional $300 a week for the unemployed — could have a greater impact on workers in states where wages are relatively low or regular unemployment benefits are low.
St. Louis Fed President James Bullard said this state-to-state discrepancy could mean that in some places, federal benefits may indeed hinder some people from reemploying.
"The rural labor market is very different from the urban labor market," he said, adding that labor costs are higher in some cities than in others. The same $300 affects people very differently. He noted that additional unemployment benefits were a factor, but not the only one.