- Federal unemployment benefits wind down in just over a week, with millions of workers set to be cut off.
- The Biden administration has said that states can use some of their stimulus funds to help out impacted workers.
- Insider reached out to all 50 states to see if they’ll extend unemployment – and the answer seems to be no.
- See more stories on Insider’s business page.
Federal unemployment benefits are set to end for millions of workers in a little over a week – and states may not step in to provide any relief as cases from the Delta variant surge and jobless claims climb.
In a letter, Treasury Secretary Janet Yellen and Labor Secretary Marty Walsh said that federal programs, which include the additional $US300 ($AU412) weekly, will not be extended past September 6.
The Biden administration provided states a path to extend aid on their own: States confronting high unemployment could tap into leftover aid money from President Joe Biden’s $US1.9 ($AU3) trillion stimulus law to renew benefits for jobless people beyond Labor Day.
The Department of Labor told Insider that states won’t need to inform them if they intend to help out with income support for people whose benefits ended. But if states do want to use their current unemployment infrastructure to get aid to jobless workers, the DOL is ready to help.
Insider asked all 50 states – and the District of Columbia – whether they’d be using those ARP funds to extend aid. The answer from all who replied: Probably not, or at least not yet.
Several states, like Wyoming and Minnesota, pointed to online job search resources and Massachusetts and Iowa cited increased use of state websites for employment.
A recent study of states that opted out of federal benefits early found it cost their economies $US2 ($AU3) billion in consumer spending. But when Insider asked about the future of unemployment benefits, they stood firm behind their decision.
“As of July 3, 2021, Tennessee does not administer unemployment benefits through any of the federal pandemic unemployment programs,” a spokesperson for the Tennessee Department of Labor and Workforce Development said in a statement to Insider. The Tennessean reported that thousands of workers lost benefits.
And, when reached for comment, the Texas Workforce Commission said: “Federal Pandemic Benefits ended June 26, 2021 in Texas. At that time (and currently), we had over 900,000 jobs posted on WorkInTexas.com and MyTXCareer.com.” When Texas announced benefits were to be cut off, over 1.3 million workers stood to feel the impact, according to an analysis from The Century Foundation.
Others states like Michigan say it’s up to state lawmakers. “How stimulus money is spent is determined by the Governor and Legislature,” a spokesperson for the Michigan Unemployment Insurance Agency said.
Some states are waiting for more guidance, which just came
None of the states that Insider heard from committed to extending unemployment benefits – but several said they were awaiting more guidance on how to potentially distribute their stimulus benefits to jobless workers.
“Leading up to the expiration of this temporary unemployment insurance, the Administration will continue to review guidance from the Treasury Department and consider all possible options and resources, including the use of ARPA and other funds, to continue supporting Rhode Islanders and small businesses,” a spokesperson for Rhode Island’s governor said in a statement to Insider.
California responded similarly, saying that they “are reviewing the letter from Treasury Secretary Yellen and Labor Secretary Walsh to Congress and look forward to examining any additional legal guidance to states from U.S. Department of Labor.” California has also proactively announced rent, food, and housing assistance to help unemployed workers who were cut off, which have been bolstered by stimulus funds.
Arindrajit Dube, an economics professor at University of Massachusetts Amherst and a leading scholar on unemployment benefits and the minimum wage, wrote in an email to Insider that states should take advantage of those stimulus funds to aid workers.
“I think states should seriously consider using unspent ARP funds to provide additional several months of benefits, possibly at a reduced benefit level to stretch the funds,” Dube said. “This taper would give workers a bit more time to find jobs and would avoid sharp spending reductions from the benefit cliff.”
On Thursday, the Department of Labor issued new guidance attempting to provide states with further clarity on how they can extend benefits. The agency said states could opt to issue periodic or one-time relief payments to workers currently on unemployment depending how much stimulus money is available.
New federal guidance may not help resolve states’ confusion
When reached for comment ahead of the guidance’s release, Washington state had its own reservations. A spokesperson for the governor said that while the initial letter “gives states express “permission” to “use the funds we already have, but there are too many unaddressed issues for many to continue to offer pandemic unemployment assistance beyond the week of Sept. 6.”
They went on to note that there’s “not much” American Rescue Plan funds left – and it’s costly to maintain weekly benefits. The state will be focused on helping with reemployment and upping vaccinations.
“To adequately address continued claim payments for those not traditionally eligible for unemployment assistance or those facing the completion of available claims weeks, we would need to see further congressional action.”
Congress, however, is highly unlikely to extend unemployment benefits. Democrats are in the early stages of assembling a $US3.5 ($AU5) trillion party-line package, but a renewal of unemployment aid hasn’t been seriously considered. Democratic moderates like Sen. Joe Manchin of West Virginia are staunchly opposed.
House progressives like Rep. Alexandria Ocasio-Cortez of New York are discussing whether to push for an extension of jobless aid in the partisan spending plan. But they would face long odds given House Speaker Nancy Pelosi’s focus on crafting a bill that can garner every Democratic senator’s support.