Republican state leaders are once again in the business of giving up free money. As of last week, a dozen GOP-controlled legislatures have declined the free federal funds in the American Rescue Plan designed to further entice holdout states to accept Medicaid expansion. While this refusal to provide health insurance to individuals making less than $17,609 a year is rooted in the same ideological arguments as the early squabbles over expansion a decade ago, a new front is emerging over ending pandemic unemployment benefits — in order to make residents go back to service-industry jobs that pay little more than the $300-per-week payments secured until September.
Last week, Montana’s Greg Gianforte was the first governor to announce that his state will end its participation in federal COVID unemployment programs. “Montana is open for business again, but I hear from too many employers throughout our state who can’t find workers. Nearly every sector in our economy faces a labor shortage,” Gianforte said in a statement. Though the funds provided by the $1.9 trillion stimulus passed in March are available to the states until September, Montana will stop providing the unemployed with $300 in federal cash every week on June 27. To help entice workers to reenter the job market, Gianforte also announced the Montana Return-to-Work Bonus Initiative, in which those who opt in prior to the deadline can receive a $1,200 payment to accept a job.
South Carolina governor Henry McMaster followed up days later without the lure of a onetime cash bonus, announcing that the state would opt out of federal unemployment benefits on June 30. “In many instances, these payments are greater than the worker’s previous paychecks,” McMaster said in a statement, which described the cash as a “dangerous federal entitlement.”
The Montana and South Carolina governors’ efforts to coerce the unemployed to return to the job market in states that are 33 percent and 29 percent fully vaccinated, respectively, are at the forefront of the debate over the full economic reopening in America. Though the artificial end of pandemic benefits will most likely create some sort of employment surge at the end of June, McMaster appears to have accidentally admitted to why many Americans are hesitant to get back to work. Setting aside state benefits, $300 weekly payments constitute an annual income of $15,600, which is a few hundred dollars more than the annual pretax income working 40 hours per week at the federal minimum wage of $7.25. If those payments are often “greater than the worker’s previous paychecks,” perhaps it’s not beneficial for these workers to return to jobs paying so little — particularly for parents navigating the final months of the second pandemic school year.
And though Republicans throughout the country have argued that stimulus benefits are creating a labor shortage, Federal Reserve Chairman Jerome Powell has noted that if that were the case, wages would be spiking. “We don’t see wages moving up yet, and presumably we would see that in a really tight labor market,” Powell said in late April, days before the release of an underwhelming jobs report. “And we may well start to see that.”