By GREGORY N. HEIRES
Millions of victims of the COVID-19 economic downturn will recall 2021’s Labor Day as a nightmare
That’s because Sept. 6 is when the extra $300 weekly COVID federal unemployment benefit will run out for an estimated 7.5 million people. The cutoff will affect about 30 million people if you include the families of the benefit recipients, according to Matt Bruenig of the People’s Policy Project think tank.
“We are still struggling with a pandemic-induced downturn,” said Trudy Goldberg, chair of the National Jobs for All Network, a full-employment advocacy group. “Millions of people continue to be out of work. We believe it is both premature and cruel for states to end this vital, extra COVID-19 benefit.”
All but two of the 26 states that denied the benefits are led by Republican governors, who they were carrying out the cuts to spur hiring. But so far, there is little evidence that the cuts are having that impact.
Unemployed workers and advocacy groups mobilized—in some cases successfully—against state plans to carry out early cuts of the federal government’s extra pandemic unemployment benefits. At least seven states faced lawsuits over the cuts.
In July, a judge in Maryland rejected Republican Gov. Larry Hogan’s lawsuit to block the state’s plan to cut off benefits. In Indiana, a judge held up a cutoff of COVID unemployment benefits to 230,000 unemployed workers. In another fightback effort included a Facebook group of 1,800 Tennesseans that is sued Gov. Bill Lee and the State of Tennessee for stopping federal unemployment benefits more than two months before the expiration scheduled for September.
In June, the grassroots groups, Unemployed Workers Union of Ohio and Unemployed Action Ohio–with support from the Ohio Organizing Collaborative–held a news conference at the Statehouse to protest Gov. Mike DeWine’s benefit cuts.
Cuts Fail to Spur Hiring
Earlier this year, the National Employment Law Project estimated that more than 4.7 million workers stand to lose the $300 supplement in the 26 states, according to the National Employment LawProject (NELP).
But the states’ attack on unemployment benefits went beyond the $300 cut. Twenty-two states also cut other federal pandemic benefits as well as state benefits. NELP estimated that would leave 2.3 million workers without any federal and state unemployment assistance at all.
About a month after two dozen GOP-led states began slashing the federal government’s extra benefit, a group of Morgan Stanley economists found the cuts had little effect on the labor market– no more than such factors as lack of childcare and transportation or health concerns.
“Conservative cuts in unemployment benefits make it harder for people to reflect on whether they want to go back to work, even as COVID cases are rising and even while average wages stay low, ”said historian Frank Stricker, author of “American Unemployment: Past, Present, and Future” and a National Jobs for All Network board member. “Despite the stories about employers having to raise pay to attract workers, real hourly wages (in purchasing power) have fallen more than 2% over the year. The shortage of workers is not short enough to increase wages faster than prices. Making more people seek work right away means less pressure for employers to raise pay.”
In May, President Joe Biden took a similar position, dismissing the suggestion that the extra $300 benefit is a disincentive for unemployed workers to return to work. The pandemic led to 22 million job losses, Biden said at that time.
For many workers, the lack of child care, poorly-paying jobs, a fear about exposure to COVID-19, a reduction in public transportation, unstable jobs without health coverage and sick leave and other benefits, and considerations about a career change are more important factors than unemployment insurance as they weigh their decision to return to work.
On his podcast, Economic Update, Economist Richard D. Wolff charged that the Republican-led states were answering the call of businesses to make workers return to their jobs while providing inadequate compensation. “Labor Shortage?” Wolff said. “Listen, Jack. You raise the wages, the shortage will vanish.”
In July, NJFAN Chair Goldberg took a position similar to and expressed support for the grassroots groups in Ohio and other states that are fighting against the early cutoff of the weekly $300 benefit.
In June, Biden said it “makes sense” for the federal government to stick with its plan for the benefits to expire in September. The president was right to criticize states for opting to end the federal benefit early. It’s unfortunate that he doesn’t feel the Sept. 6 expiration is also premature.
Gregory N. Heires, blogger of the New Crossroads, is the editor of the Jobs for All Newsletter and former president of the Metro NY Labor Communications Council. A version of this story appears in the Jobs for All Newsletter.
