Expanded unemployment benefits ended in four states on June 12. And they ended in eight more states on June 19.
Many people — primarily those who own restaurants, retail stores — have blamed the federally authorized expansion of unemployment benefits for causing a “labor shortage.” Without any evidence to support their claims, they have argued that all, most, or many people who had jobs in restaurants and retail stores — whose employers laid them off or terminated their ering the pandemic — have chosen to collect unemployment compensation instead of returning to work as those restaurants and stores have reopened in the last 6-8 weeks.
In addition to state-provided unemployment compensation, the federal government authorized up to an additional $300 per week per unemployed person.
During the pandemic, many states suspended requirements that people continue to actively prove how they looked for jobs in order to continue receiving unemployment benefits. Many of those states already reinstated those work-seeking-proof requirements in May and June. Those work-seeking-proof requirements apply to anyone seeking any state-Unemployment Insurance- provided unemployment payments.
States Ending Additional Unemployment Benefits
The states that ended the payment of additional federal unemployment benefits on June 12 are Alaska, Iowa, Mississippi, and Missouri. Eight states ended additional unemployment benefits on June 19. They are Alabama, Idaho, Indiana, Nebraska, New Hampshire, North Dakota, West Virginia, and Wyoming.
This will provide a test of whether the “labor shortage” was the result of those expanded federal unemployment benefits. If expanded benefits kept people from accepting jobs, unemployment in Alaska, Iowa, Mississippi and Missouri should drop this week. Additionally, those states’ unemployment rates should drop quickly, especially in the restaurant, hospitality and retail sectors of the economy.
On June 26 and 27, another 12 states will end the federally authorized additional $300 per week payments. That will mean that 24 — nearly half — of all 50 of the United States will have stopped payment of the expanded unemployment benefits by the end of June.
The Federal government will stop the additional payments by Labor Day, 2021. Consequently, remaining 51 states and the District of Columbia will end payments of additional benefits by/or before Labor Day.
The month of July should show a dramatic surge in employment and a very fast elimination of the “labor shortage” affecting those states if the claim — made primarily by Republicans — that expanded federally authorized unemployment benefits caused the labor shortage.
However, if the expanded unemployment benefits did not cause the labor shortage and of higher unemployment rates in those states — as many economists, labor experts and statisticians have concluded — then we will likely see a small but not statistically significant reduction in the “labor shortage” and unemployment levels as the economy recovers.
Stay tuned.