States canceling extra unemployment benefits will cost local economies $12.3 billion
Half of the states that plan to cut the additional $ 300 in weekly unemployment benefits this month could cost their local economies $ 12.3 billion, according to a new study. The analysis comes a day after Maryland became the last GOP-led state to drop out of the unemployment program.
“There's little evidence that an improved UI is a brake on employment. In fact, their termination could cost the local economy more than 12 billion US dollars, "said chairman Don Beyer (D-VA) in a statement on Wednesday after the publication of the analysis by the Joint Economic Committee (JEC) of the US Congress. "If states continue with their plans to end these critical programs, they will wreak havoc on millions of Americans and further hamper our economic recovery."
The analysis uses a multiplier effect, which shows that every $ 1 in unemployment benefits generates $ 1.61 in local expenses, based on estimates by the Center on Budget and Policy Priorities.
The cost to the local economy is likely to be higher when the Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) programs are included. PUA offers benefits to workers who are normally not eligible for unemployment insurance, while PEUC offers additional weeks of benefits.
Twenty of the 25 states also waive PUA and PEUC, while Alaska, Arizona, Florida, Ohio, and West Virginia are only withdrawing the additional $ 300 weekly surcharge.
Maryland is the last Republican-run state to get out of federal unemployment programs early, bringing the total number of states to 25 with 4.5 million workers left with little to no benefits over the next month.
"While these federal programs have provided important temporary relief, good vaccines and jobs are now available," Governor Hogan said Tuesday in a statement facing massive labor shortages. "
Maryland's unemployment rate remained at 6.2% in April, after its pandemic high of 9%, but above its pre-pandemic 3.5% level. As of July 3, around 300,000 Maryland workers will lose at least $ 3,000 in additional unemployment benefits. The federal programs will expire nationwide on September 6th.
"If you lost your job last year, there is nothing for you"
A man wearing a face mask walks past a "Now Hiring" sign outside a shop amid the coronavirus pandemic on May 28, 2020 in Arlington, Virginia. (Photo by OLIVIER DOULIERY / AFP via Getty Images)
After the disappointing job report in April, the cancellation of federal programs among Republican governors gained momentum. House Republicans, including House Republican Leader Kevin McCarthy (R-CA), issued a letter in early May calling on all GOP governors to withdraw from federal programs.
Massachusetts and Vermont are the only states with GOP governors that haven't canceled federal programs yet.
According to an analysis by the Century Foundation, workers in these 25 states will collectively lose $ 25.2 billion in benefits, an average of thousands of dollars per worker.
"By subtracting these benefits in these states, there is basically nothing for most people," Andrew Stettner, an unemployment insurance expert and senior fellow at the Century Foundation, told Yahoo Money. "The state benefits only last 26 weeks. In some states it takes even less. So if you lost your job last year, the state program doesn't have anything for you."
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