The $300 per week supplemental unemployment benefits being paid by the federal government through Labor Day have become increasingly controversial, with a growing number of Republicans and business-friendly interest groups calling for an early end to the program, blaming the payments for the sluggish jobs recovery.
Twenty-five states, all led by Republican governors, have announced they will end the program early, starting as soon as this month. And on Friday, several GOP lawmakers alluded to the enhanced benefits as they sought to blame Democrats for the lackluster jobs report. “Biden policies are disincentivizing work & harming our recovery,” Republican Rep. Darin LaHood (IL) tweeted, echoing an oft-heard complaint that generous unemployment benefits, part of the $1.9 trillion Covid relief act signed into law in March, are allowing people to stay out of the labor market.
Some economists dispute the notion that the enhanced unemployment benefits are the main factor in disappointing job growth, though most agree that they have played at least a minor role. “[T]he idea that unemployment benefits are serving as a barrier to re-entry in the labor market suffered a major blow” in the May jobs report, Joseph Brusuelas, chief economist at the consulting firm RSM, wrote Friday. “Job gains of 292,000 in the leisure and hospitality sector in May and 1.24 million over the first five months of the year imply that such arguments are not tethered to empirical reality and have more to do with the politics of the Biden administration’s first year than an objective assessment of the data.”
Still, the repeated criticism of the enhanced benefits appears to have had an effect on Democrats, some of whom had hoped to extend the payments or even make them a permanent feature of the unemployment system. On Friday, the president said for the first time that he thinks the program should expire on schedule, marking a shift in the administration’s attitude toward the benefits. The extra money “helped people who lost their jobs through no fault of their own, and who still may be in the process of getting vaccinated. But it's going to expire in 90 days,” he said, adding that it “makes sense it expires in 90 days.”