A top economic adviser to President Biden said Thursday that Republican governors were being premature in cutting enhanced unemployment benefits provided as part of the pandemic relief package passed in March.
Cecilia Rouse, chair of the Council of Economic Advisers, said at a Bloomberg conference that the extra payments are still needed. “There will come a day when we do not need these additional supports. There’s no question, these were designed to get us to the end of the pandemic. But we’re not there yet,” Rouse said.
The enhanced payments have become the subject of debate after the monthly employment report for April showed a much weaker than expected 266,000 jobs added, spurring some economists and governors to argue that the $300 weekly federal supplement to state jobless benefits was creating a powerful incentive for workers to stay out of the labor market. Other economists, at the White House and elsewhere, have said that other factors, including pandemic fears, a desire for higher wages and a need for childcare, may play a larger role.
Rouse reportedly also cited the timing of the monthly unemployment survey, arguing that more jobs were added as the pace of Covid vaccinations picked up later in April. “We will get back to a full recovery and by the end of the year we will be in really good shape,” she said.
What’s at stake: Texas, Indiana and Oklahoma on Monday became the latest states to say they would end the $300 federal benefit boost well ahead of its September expiration, joining nearly 20 other Republican-led states.
In total, jobless workers in at least 22 states are set to see their unemployment payments fall by $300 a week or get wiped out completely, The Washington Post says. Nearly 3.7 million out-of-work Americans will lose benefits in June or July, according to an analysis by The Century Foundation cited by CNN. These workers will lose out on nearly $22 billion in benefits. “The financial burden could fall hardest on about 2.7 million workers who are at risk of seeing their benefits eliminated entirely,” the Post says. “That includes Americans who have been out of work for so long that they have exhausted state allocations as well as those who are self-employed and participating in a program known as Pandemic Unemployment Assistance.”
Biden in a bind: The Biden administration may be opposed to cutting off the enhanced benefits, but there’s apparently not much it can do to prevent it.
The Washington Post’s Tony Romm and Eli Rosenberg report that Labor Department officials have concluded that the law does not offer them a way to keep the extra benefits flowing: “The Labor Department generally can’t force GOP leaders to pay the federal stimulus benefits under a national unemployment system that gives states broad latitude to implement their own systems … . Nor can federal agencies circumvent Republicans by administering unemployment checks on their own or through cooperating agencies in other states, according to those familiar with its thinking. Even if the Labor Department had the authority, the agency probably would face significant legal, logistical and technological hurdles in distributing the aid swiftly — a complex task involving a web of technology and personnel that has flummoxed many state agencies despite decades of experience.”
The bottom line: Federal officials reportedly believe that any reversal of the GOP state changes must come from Congress, which as of now appears unlikely to act.
And some reason for optimism: About 444,000 Americans filed first-time jobless claims last week, the Labor Department said Thursday. That’s the lowest number of new filings since March 14, 2020.