States Move to End Federal Jobless Benefits

At least 14 states have moved to cut off the $300 per week enhanced federal jobless benefits that were scheduled to last until September. Roughly 30 states are reinstating a requirement that the unemployed prove they are looking for work to receive state benefits.

At least 14 states have moved to cut off the $300 per week enhanced federal jobless benefits that were scheduled to last until September. Roughly 30 states are reinstating a requirement that the unemployed prove they are looking for work to receive state benefits. The Department of Labor is working to encourage states to impose these requirements, which were largely lifted last year in response to the COVID outbreak. At least one state (Montana) is offering return-to-work bonuses to unemployment recipients who accept a job offer. Other states are exploring this option as well.

Texas Gov. Abbott marked the most recent to announce that Texas would no longer participate in the federally funded unemployment programs effective June 26.  Texas will stop participating in ARPA programs, including Federal Pandemic Unemployment Compensation (FPUC), Pandemic Emergency Unemployment Compensation (PEUC), Pandemic Unemployment Assistance (PUA) and the Mixed Earners Unemployment Compensation Program (MEUC). 

The Texas Office of the Commissioner Representing Employers and the Office of the Governor-Economic Development & Tourism Division on May 20 will host a webinar at 10:00 am during which industry association experts will discuss best practices, resources and strategies for recruiting, hiring and retaining potential employees. To register, click here.

This flurry of activity underscores the rising concern that the economic recovery could be jeopardized, right as lockdown restrictions are being lifted, if businesses are unable to hire enough staff to keep up with surging consumer demand. The problem is especially acute for the travel center industry given the extraordinarily busy summer driving season that is expected.

In a statement released last week, the U.S. Chamber of Commerce said: "The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger job market....Based on the Chamber's analysis, the $300 [federal unemployment] benefit results in approximately one in four recipients taking home more in unemployment than they earned working."

Under current law, workers are not allowed to turn down a job and continue receiving benefits because of a "non-specific concern" about the virus.  Workers can do so if they meet certain criteria outlined in the Families First law Congress passed last year, such as having a child who cannot go to school because of the pandemic.

Fears of a labor shortage were fed by government data last week showing employers added just 266,000 jobs (far short of the nearly 1 million that was forecast).

Democrats have been signaling that they are unlikely to support extending the enhanced federal benefits beyond the program's current September expiration date. 

At the same time, eligible households will begin receiving direct cash payments in July under a child tax benefit included in the COVID relief bill Congress passed earlier this year. The IRS on July 15 will start delivering a monthly payment of $300 per child under age 6 and $250 per child 6 or older for those who qualify. The benefits will be deposited directly into most families' bank accounts on approximately the 15th of every month, for the rest of the year, without any action required.

Labor is just one in a litany of shortages that American consumers and businesses face this year:

In the restaurant industry, experienced servers had the last year to find other jobs with better security and fewer health risks.

In lumber, the high prices are a consequence of the decision by sawmills to shut down production a year ago in anticipation of an economic slump.

In autos, high prices reflect decisions by chip manufacturers early in the pandemic to concentrate on making semiconductors for consumer electronics at the expense of making chips for vehicles.

In agriculture, many products that function as a feedstock for renewable fuel (corn, soybean oil) are in such high demand that they are pushing RIN prices to all-time highs (more on this below).

On the bright side, if price rises in certain items are caused by temporary shortages, some economists conclude that the ensuing inflation is also likely to be temporary.

The Wall Street Journal reported that many state and local governments do not need the money they are set to receive pursuant to the COVID relief package passed earlier this year. Budget shortfalls were not as steep as projected, and the federal aid could leave some governments looking for creative ways to spend the newfound cash. The law prohibits states from using the additional revenue to facilitate tax cuts.

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