- States across the US are starting to cut enhanced unemployment benefits implemented during the pandemic.
- Republicans argue that the benefits are the reason more people aren’t going back to work, but the evidence shows that in many cases that’s not true.
- Cutting these benefits now, without anything for people to fall back on, is unnecessarily cruel.
- Bobbi Dempsey is a freelance writer, economic justice fellow at Community Change, and reporting fellow at Economic Hardship Reporting Project.
- This is an opinion column. The thoughts expressed are those of the author.
- See more stories on Insider’s business page.
At least half of US states will soon put a halt to benefits that many unemployed or underemployed workers have relied upon to keep their heads above water financially through the pandemic.
More than two dozen Republican governors have announced that their states would soon begin to opt out of federal pandemic programs that provide enhanced unemployment benefits — and Alaska, Iowa, Mississippi and Missouri cut off the benefits last week. The latest is Gov. Larry Hogan of Maryland, who said he felt the expanded benefits are no longer needed since “vaccines and jobs are now in good supply.”
In addition to ending the enhanced unemployment payments of $300 in federal benefits, these actions also halt initiatives that provided benefits to freelancers, gig workers, and so-called “mixed earners” — people who had both W2 income and additional earnings from self-employment or gig work.
It’s worth noting that many of the states taking this action are also among the states with the lowest minimum wage — in many cases, at or just above the federal minimum wage of $7.25 an hour. These lawmakers are cutting benefits many of their constituents desperately need, while at the same time not doing anything to ensure people can find jobs that pay a reasonable living wage. A full-time minimum-wage worker cannot afford a two-bedroom rental anywhere in the country, and a one-bedroom rental is also out of reach almost everywhere.
Part of a popular pandemic relief package
Polls show that the majority of Americans support the American Rescue Plan and the economic initiatives it enabled, including, in addition to the continued enhanced unemployment benefits, the $1,400 stimulus payments and expanded tax credits.
These actions put cash directly in the pockets of families who needed it, and the expanded unemployment benefits played a major part in supporting families in need. For Americans who lost their job or had their hours at work cut, those benefits are a financial lifeline — one that can help recipients pay for childcare while they look for a job. Thanks to that support, these families can keep the lights on, put food on the table, and pay other essential bills. Researchers at the University of Michigan studied US Census Bureau data and found that COVID-19 relief initiatives passed since December 2020 significantly reduced food insecurity and financial instability, while also decreasing mental health symptoms like anxiety and depression.
Ironically, even though every Republican lawmaker voted against the latest relief package, many of them are now raving about the benefits it provided to their constituents.
Higher wages would eliminate much of the problem – while also making financial sense
Lawmakers and businesses who strongly support an immediate end to these benefits repeatedly cite a supposed “labor shortage” and claim the benefits are the reason why many employers are having difficulty filling open positions.
The idea that people simply don’t want to work is unfair and often proven untrue. More often, the reality is that the “choice” of whether to return to or accept a job that won’t even pay enough to cover their most essential expenses — let alone the childcare they would need to take the job — really isn’t a choice at all.
Case in point: A Pittsburgh ice cream shop was initially having trouble meeting staffing needs until it raised its standard wage to $15 an hour (more than double the previous rate, which was the state minimum wage of $7.25). After the wage hike, the business was flooded with more than 1,000 job applications. The shop quickly filled all open positions, and the shop’s co-owner says the move hasn’t hurt the bottom line. Plus, he says employee morale is high and staff members enjoy better work-life balance since they no longer need to work multiple jobs to cover their bills.
The argument against higher pay is typically that it costs too much and would hurt the business financially, but the data doesn’t necessarily prove that true, and actually makes a strong argument for the benefits of paying workers more. Research shows that higher wages can in fact improve a company’s profitability.
It’s no coincidence that some of the businesses complaining the loudest about this supposed “worker shortage” are in the retail and restaurant sectors and other industries notorious for paying low wages, taking advantage of workers, and implementing policies that have a negative impact on the worker’s family life and work-life balance. Their employees — often hailed as heroes for keeping our communities going through the pandemic — struggled to juggle everything in the wake of daunting challenges. They battled the challenges of a job with unpredictable hours and constantly changing schedules, while often working under seemingly inadequate COVID-19 protections. It’s not surprising that nearly a third of essential workers said their mental health suffered during the pandemic. This workforce includes many parents whose kids are attending school remotely or who are too young for school, who had to scramble to come up with childcare arrangements when many daycares were closed.
Financial panic for those finally feeling hopeful
Suddenly cutting off support for the unemployed or underemployed at this point seems like especially cruel timing, coming at a time when many Americans are finally starting to see reason for hope.
Things are definitely looking up for our country as a whole. COVID-19 restrictions are loosening, and many of us are starting to take steps towards resuming at least some of our normal pre-COVID activities. More than half of all eligible Americans are now fully vaccinated (although vaccination rates have been slowing, and vaccine hesitancy is a challenge among the remaining adult populations). So there are good reasons to feel more optimistic than we have in a long time.
However, for many Americans, the financial impact of the pandemic remains a painful daily reality. Those who lost their jobs last year may still not have found work — at least, not work that would sufficiently cover their bills or offer feasible arrangements that would accommodate other life circumstances. This is especially true for those who experienced medical crises, people who are caring for sick or recovering family members, or parents who have had children home for most or all of this past school year.
For these people, cutting their expanded unemployment benefits — and the break from financial anxiety the extra money provides — feels like a painful gut punch, wiping out any sense of hope they may have started to enjoy.
It’s a particularly brutal move on the part of lawmakers who have failed to take any steps that would help these workers have a better chance at finding a job that pays a reasonable living wage, or obtain daycare that won’t eat up their entire paycheck.
Instead of putting all of the blame on workers or those who cannot accept a job with minimal pay, sporadic hours, and unreasonable demands, perhaps lawmakers and employers should evaluate their own responsibilities and support positive changes such as a higher minimum wage and childcare subsidy programs that would help people earn enough so their families can thrive.