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Governors ending federal unemployment bonus to get people to work

Ongoing federal unemployment benefits are discouraging many workers from returning to work. Several Republican governors are ending these benefits early to help businesses struggling to find help.

A recent analysis by University of Chicago economists Peter Ganong, Pascal Noel, and Joseph Vavra found that 68 percent of unemployed individuals eligible for unemployment qualify or get payments that are greater than their actual lost earnings. According to the study, the median replacement income is 134 percent of wages. And more shockingly, under the new Biden stimulus package, a full one out of five eligible unemployed people will receive benefits at least twice as large as their lost earnings. Yes, twice as much as their previous wages.

READ: Businesses are now closing for lack of workers

“We absolutely can put more people to work,” Florida Gov. Ron DeSantis said in response to the growing demand to end the excessive benefits. He announced that Floridians receiving the $300 weekly extra payments soon will have to provide proof that they’re actively looking for a job.

In many states, payments approached $50,000 per unemployed worker when generous federal unemployment checks were added to state benefits. That’s untenable and unethical say economists because it disincentivizes people to work.

Arkansas Gov. Asa Hutchinson said that by the end of June his state would no longer participate in the extended weekly unemployment benefits under the Biden administration’s new $1.9 trillion stimulus plan, three months earlier than its expiration. Earlier, the Republican governors of Montana and South Carolina announced similar plans, claiming that these benefits have discouraged people from returning to the workforce and have become a drag on the recovery.

GOP Texas lawmaker Kevin Brady meanwhile has said he expects more states will follow suit, accusing the White House of being “in denial” that many businesses are struggling to hire more people.

“Normally when you’re getting unemployment, the whole idea is that’s temporary and you need to be looking for work to be able to get off unemployment,” DeSantis said. “It was a disaster, so we suspended those job search requirements. I think it’s pretty clear now, we have an abundance of job openings. The demand is there. Businesses want to hire more people, and I think we can go in that direction very soon.”.

U.S. jobs growth for April was far lower than what the market had predicted. According to the Bureau of Labor Statistics, the U.S. economy added 266,000 jobs last month vs. an estimate of one million. The unemployment rate rose to 6.1 percent from 6 percent in March. Nearly 40 percent of workers could make more on unemployment at the $300 level than they would earn by returning to work, according to American Action Forum, a center-right policy institute. The economy is still 8.2 million jobs below pre-COVID levels

Businesses and organizations, including the U.S. Chamber of Commerce, one of the largest business lobbying groups, have called on the Biden administration to end the unemployment benefits. It’s “clear that paying people not to work is dampening what should be a stronger jobs market,” the group said.

However, President Joe Biden, when asked by a reporter whether the enhanced unemployment benefits had had any effect on the weak job numbers, said, “No, nothing measurable.”

–Alan Goforth | Metro Voice