Do Federal Unemployment Supplemental Benefits Keep Employees from Returning to Work?

It’s a question that many have been asking recently: Are Federal Unemployment Supplemental Benefits of $300-a-week Keeping employees away from returning to work?­­ Like most things, it’s not that simple.

With the increasing opening of the economy from Covid-19 restrictions, there are concerns being heard from local businesses in both Inyo and Mono counties, both currently in the Orange Tier of the state’s4-Tiered Blueprint for a Safer Economy Reopening Plan, that they are currently having difficulty finding employees. Some are claiming that the extra $300-a-week federal supplemental unemployment benefits are partially to blame. Readers may recall that at the height of the pandemic last year, the federal benefit was $600 per week on top of the normal state benefit.

According to several local Inyo and Mono counties’ business owners, who wished to remain anonymous, some former employees ar­­­­­­e not returning to their old jobs, and according to some reports, many of them have left the area, and appear unlikely to return. The claims of employers having trouble finding workers is—so far at least—largely anecdotal. In any event, federal subsidies appear to be unlikely to extend beyond September, according to the chairman of the Federal Reserve, Jerome Powell, who also said that it is “not clear” if the current benefits are causing a labor shortage.

Local business owners are not the only ones that say the federal supplements unemployment payments are making it difficult to hire new employees and rehire former employees. So far, three Republican governors across the country are claiming the same thing: that the extra money “disincentivizes” people going back to work.

On Wednesday, May 5, Montana Gov. Greg Gianforte (R) said his state would withdraw from the program by June 27, claiming his state was being plagued by a labor shortage. It will instead offer a one-time $1,200 bonus for returning to work. Its maximum weekly benefit amount is currently $510.

South Carolina Gov. Henry McMaster (R) announced on Thursday, May 6, that the state would end the federal subsidy at the end of June. South Carolina has a maximum unemployment benefit of $326 a week (before taxes).

On Friday, May 7, Arkansas became the latest state to announce ending the federal subsidy, when Gov. Asa Hutchinson said it would end the additional $300 a week program by the end of June as well.

As for California, a solidly Blue Democratic state, it is unlikely, if not inconceivable, that there will be any change in policy on ending the federal subsidy in what many acknowledge is one of the most expensive states in which to live. The maximum unemployment benefit in California is $450 a week.

Current unemployment rates in both Inyo and Mono counties, according to numbers from the California Economic Development Department (EDD), show unemployment rates higher now than before the beginning of the pandemic, before shutdowns and Covid-19 restrictions forced the closing of most businesses under the state’s 4-tiered Blueprint for a Safer Economy  Reopening Plan. But the unemployment numbers are falling. The question for local businesses will be, “Are there enough workers to fill the job openings?”

At the beginning of the pandemic, many employees suddenly found themselves out of work and filed for unemployment. The irony, say some, is most of the out of work employees were making more money on unemployment and had a more stable income with unemployment benefits than what they earned while working in their former jobs. Local employers may have to accept that they must pay higher wages if they have any hope of regaining their old employees or finding and holding on to new employees.

Inyo and Mono counties are both hoping to move into the Yellow-Tier this week, but if not, Gov. Gavin Newsom has already announced the state will end the tier system, removing restrictions on businesses, effective June 15.

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2 years ago

I am a 74 year old school bus driver that is working but with everything going up I need the unemployment

2 years ago

It is never that simple. If it were, raising wages would always solve the problem. Some people moved. Some people got new jobs. Kids are back in school here, but I don’t know if preschoolers have the same level of child care available as before. And Sterling Heights is shutting… Read more »