Federal unemployment

Which States are Ending Federal Benefits?

by David Klemt

So far, 22 states across America are planning to end the weekly $300-per-week federal boost to unemployment.

Some reports suggest a few states will opt out of federal unemployment benefits as early as June 12.

Obviously, that’s significantly earlier than the September 6 expiration the American Rescue Plan mandates.

Two Sides

Clearly, the impact opting out of the federal unemployment program is largely academic at this point. We won’t know if the move will lead to a boost in hiring across the country or simply plunge struggling Americans further into peril.

One side, those who support the exit, believe the move will jumpstart the economy and hiring.

In their view, the $300-per-week benefit is a disincentive for claimants to seek employment. That, in turn, is what’s fueling the current labor shortage.

“Incentives matter,” says Montana Governor Greg Gianforte. “And the vast expansion of federal unemployment benefits is now doing more harm than good.”

The opt-out by 15 states will impact 1-1.5 million people.

Now, the other side believes opting out is cruel and will make it even more difficult for drowning Americans to get their heads above water. As they see it, most jobless people are using state and federal unemployment programs correctly.

“Let’s not take our eye off the ball,” says President Joe Biden. “Families who are just trying to put food on the table, keep a roof over their head, they aren’t the problem.”

Hospitality Industry Struggles

Obviously, the $300-per-week benefit is often cited by operators as one of the main reasons they can’t fill available positions.

Unfortunately, the reality of the situation isn’t that simple. Scapegoats may be “convenient” but they’re also dangerous—they distract from real issues.

The pandemic, mass unemployment, and current labor shortage isn’t solely the product of unemployment payment enhancements. A significant portion of hospitality workers aren’t working for other reasons. Many are leaving the industry entirely due to an array of issues.

These include workplace culture, inequity, lack of diversity and inclusion, and earning a livable wage, many among others.

Sure, it’s convenient to point to and vilify one contributor to the hiring struggles operators are facing. However, it’s clear that the industry has long-term problems with which it must reckon. Things can’t continue as they were pre-pandemic if the industry is to reset, recover and thrive in a post-pandemic world.