Of the more than four million people whose unemployment benefits will be cut in the next few weeks, Bre Starr will be among the first.
That’s because Ms. Starr – a 34-year-old pizza delivery man who has been unemployed for more than a year – lives in Iowawhere the governor decided to withdraw from all federal unemployment benefits in connection with a pandemic this coming Saturday.
Iowa is one of 25 Republican-run states that recently decided to end some or all of the emergency services months ahead of schedule. With a Labor Department report on Friday showing employment growth was below expectations for the second straight month, Republicans reinforced their argument that pandemic unemployment benefits are hindering recovery.
The aid, which was renewed in March and financed until September 6, does not cost the states anything. But business owners and managers have argued that the income that enabled people to pay rent and store refrigerators when much of the economy was closed is now preventing them from applying for jobs.
“Now that our stores and schools have reopened, these payments are keeping people from getting back to work,” said Iowa Governor Kim Reynolds when announcing the interruption. “We have more jobs than unemployed”
However, while the governor complains that people are not returning to work early enough, some Iower respond that they are being forced to return early.
“I am type 1 diabetic, so it is really important for me to protect against Covid infection,” said Ms. Starr, explaining that she was more prone to infections. “I know that for myself and for other people at high risk, we cannot risk re-entering the job market until everything is fine again.”
But what does “good again” mean?
Covid-19 cases have declined in Iowa as across the country, and the death toll is at its lowest level since last summer. Status Restrictions were suspended in February, businesses are reopening, and Iowa’s unemployment rate was 3.8 percent in April, the most recent period for which government figures are available – much lower than the national 6.1 percent this month. (Unemployment rate in the 25 states that cut benefits, the figure was between 2.8 percent and 6.7 percent.)
Most economists say there is no clear, single explanation however, for the difficulties some employers have in hiring. In some cases, government assistance can play a role, but so can a lack of childcare, persistent fear of infection, poor wages, difficult working conditions, and normal delays associated with reopening a mammoth economy.
However, the particular complaints that government benefits undermine the desire to work have struck a nerve with Republican politicians.
In Ms. Starr’s case, Ms. Reynolds’ move to end federal unemployment benefits in Iowa is likely to have the intended effects.
Ms. Starr can be counted among the long-term unemployed. She has relied on a mix of pandemic-related benefits since last spring when she quit her job as a delivery driver for Domino’s Pizza after coworkers fell ill.
She probably would have got her job back by now; Domino’s in Des Moines advertises drivers. But Ms. Starr was hesitant to apply.
“Many people in Iowa don’t wear masks – they think Covid is fake,” said Ms. Starr, who is not only concerned about her own risk of infection, but also about the health of her 71-year-old father. Who she cares for: He has emphysema, diabetes, and heart problems.
An early exit from the federal unemployment assistance network affects everyone in the state who takes out unemployment insurance. Ms. Starr, like all recipients, will lose a $ 300 weekly federal scholarship that was designed to supplement unemployment benefits and generally replace a fraction of a person’s previous salary. In most states, the resolution also ends pandemic unemployment benefits, which include freelancers, part-time workers, and self-employed people who are normally not eligible for unemployment insurance. And it will stop the pandemic emergency unemployment benefit that continues to pay people who have exhausted their regular allotment.
In addition to the $ 300 bonus, Ms. Starr will receive $ 172 per week in pandemic unemployment benefits. That’s about $ 230 less than she made on her previous job. The state checks pay for her rent, food, and some of her father’s medicine, she said.
Ms. Starr, who is vaccinated, said the governor’s order would likely force her to return to work despite her health concerns. She’s considering doing some kind of customer service job from home, although that would involve buying a laptop and maybe using landline phone service, she said. Otherwise, she said, she may have to take another delivery job or work in an office.
Whether or not their case is evidence that an early termination of unemployment benefits makes sense depends on the perspective.
In many cases, the problem isn’t that people don’t want to work, said Jesse Rothstein, professor of public policy and economics at the University of California at Berkeley. Rather, benefits give the unemployed more opportunities, as he said, such as the ability to “say no to things that may not be safe or may not go well”.
However, Mr Rothstein cautioned against drawing general conclusions.
“The reopening was very quick,” he said. It is therefore not surprising that there are friction losses during start-up and adjustment, which could be independent of the benefits. “It may only take a few weeks to reopen,” he added. “Some of the difficulty employers have in finding workers is that they all tried to find them on the same day.”
On the online job board Indeed, job hunting in states that have announced an early end to state unemployment benefits has sped up on the national trend. But the increase was modest – about 5 percent – and disappeared a week later, said Jed Kolko, Indeed’s chief economist. And it wasn’t just low-wage jobs that drew more responses; as well as the financing of positions and job offers for doctors.
Aside from any discussion of the impact of unemployment benefits on the labor market, economists warn of the long-term scars the pandemic is inflicting on the economy.
“It is important to remember that we are not going back to the same economy,” said Federal Reserve Chairman Jerome H. Powell, has said. “It’s going to be a different economy.”
“The real concern,” he said, “is that longer-term unemployment can lead to people’s skills withering, their connections to the labor market dwindling, and their difficulty getting back to work.”
About 41 percent of the country’s 9.3 million unemployed fall into the long-term category, which is defined as more than 26 weeks. About 28 percent of the total population has been unemployed for more than a year.
Historically, this group, which is disproportionately made up of blacks and older Americans, has had a harder time getting hired. That pattern is likely to repeat itself under the unusual circumstances caused by the pandemic, said Carl Van Horn, the founding director of the Heldrich Center for Personnel Development at Rutgers University.
Employers tend to be negative about people who have been unemployed for an extended period of time or have gaps in their resume, regardless of the reason, Van Horn said.
“Employers always complain that they can’t find the job seeker they want right now at the price they’re willing to pay, be it the best economy in 50 years or a terrible economy,” he said.
The problem with the premature termination of unemployment benefits is that “such a broad brush policy also punishes people who are also desperately looking for work”.
This is the situation Amy Cabrera is facing in Arizona. Since her leave of absence last summer, Ms. Cabrera, 45, has been living on about $ 500 a week after-tax unemployment benefits – roughly half the salary of $ 50,000 in her previous job auditing American Express’s meetings and events division performed.
To make ends meet, she gave up the lease for her car and sublet a room in the house she rented in the San Tan Valley, southeast of Phoenix. “I pay for my food – whatever I need to survive – and that’s it,” she said as she sat in the used 2006 Jeep she bought so she wouldn’t be negligent. Food stamps help pay for their meals.
But Ms. Cabrera rejected the idea that there were many jobs to be found in Arizona, where the governor has moved US $ 300 federal allowance ends on July 10th. Many positions she is qualified for, including senior administrative and office management jobs, pay $ 15 an hour, she said, nowhere near enough to cover her $ 1,550 monthly rent and part of college fees to pay her son. For jobs in Phoenix or Tempe, she would have to commute almost two hours each way during rush hour. And because of a back ailment, she can’t have a job that involves spending time on her feet.
“I was desperate for work,” said Ms. Cabrera. Still, of the 100 or so positions for which she was estimated to have applied, she only had one interview.
She said she did not know how to live on her remaining unemployment benefit – $ 214 a week after taxes – if she lost the $ 300 supplement.
“I really don’t have an answer to that,” she says. “I was really just trying to roll with the punches.”