Governor Reeves Cancels Federal Unemployment Benefits

Governor Reeves Cancels Federal Unemployment Benefits

Earlier this week, Governor Tate Reeves announced that Mississippi will soon opt out of supplemental federal unemployment benefits provided by a key pandemic aid relief package. The Mississippi governor believes that the additional unemployment benefits are discouraging Mississippians from returning to work. Governor Reeves joins a growing number of Republican governors who are opting out of receiving the federal assistance after an April jobs report released by the Department of Labor Bureau of Labor Statistics registered a nationwide lower than expected added jobs and increased unemployment rate. However, there is no compelling evidence that suggests the federal aid is damaging to job creation and economic growth.

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act established the Pandemic Emergency Unemployment Compensation (“FPUC”) program, which initially provided $600 per week in federal unemployment benefits in addition to state unemployment benefits beginning in March 2020. The program currently runs under the American Rescue Plan (“ARP”) Act of 2021. Under the ARP Act, the FPUC program provides $300 per week in additional unemployment benefits through September 6, 2021. States are allowed to opt out of the federal assistance prior to the program’s expiration date.

Currently, Mississippians are eligible to receive the $300 per week in federal unemployment benefits in addition to the up to $235 in weekly unemployment benefits provided by the state. Among other requirements, eligibility for the benefits is limited to an individual who must be able to work, be available for work and seeking full time work, and be unemployed due to no fault of his or her own. As of January 2021, MDES reported FPUC payments to more than 62,000 claimants totaling over $18 million in federal supplemental benefits.  According to MDES, approximately 70,000 Mississippians currently rely on the additional $300 per week.

In his announcement, Governor Reeves stated that the additional unemployment benefits provided by the federal government in response to the coronavirus pandemic are contributing to a labor shortage in the state and are no longer necessary. Governor Reeves mentioned that the state’s economic recovery depends on filling thousands of available jobs, and he expressed the need for MDES to enforce existing eligibility requirements for anyone to receive unemployment benefits.

But Governor Reeves’ assumption that supplemental unemployment benefits are causing Mississippians not to return to work is largely unfounded.   Several studies conducted after the expiration of the initial $600 per week in benefits—provided by the FPUC program—found that supplemental federal unemployment benefits had no substantial negative impact on the job market. Other studies show that job applicants are more concerned with long term income from a lasting job than they are on temporary income from temporary benefits. And other studies reveal that previous unemployment benefits acted as a true stimulus and not a hindrance to labor marker improvements.

Additionally, the White House contends that the federal unemployment benefits are not causing a labor shortage and clarifies that there is no data that suggests otherwise. Instead, the White House suggests that other factors, such as lagging vaccination rates for COVID-19, Covid-19 childcare-related responsibilities, and the need for a livable wage, contributed to the lower-than-expected numbers in the April’s job report.

The ongoing pandemic underscores the increasing need for the state to provide Mississippians with a true, livable wage―one that supports the state’s working families. Mississippi is one of five states that have yet to adopt a state minimum wage. With no state minimum wage, the federal minimum wage of $7.25 applies. There is growing support within the federal government to raise the federal minimum wage to $15 an hour. Along with other benefits, an increased minimum wage would help narrow race and gender pay gaps, benefit essential and front-line workers, and have a positive impact on the labor market.

By all accounts, an individual’s decision to enter or leave the labor market can be based on various considerations. Mississippi gains little from Governor Reeves’ decision. The purpose of the additional benefits was to help stabilize families, prevent poverty and increase consumer spending during the global health pandemic and resulting economic crisis. And the federal unemployment benefits and other pandemic relief programs are serving their purpose. Opting out of federal unemployment benefits without acknowledging other contributing factors to the lower-than-expected job gains or without considering alternative measures to increase labor growth only creates additional uncertainty for Mississippi families and the state’s economy.

Instead of fighting against federal recovery and relief aid, state lawmakers should build upon the temporary relief by making investments in community services such as education, healthcare, and infrastructure. Mississippi lawmakers hurt those most in need, including essential workers and Mississippians working low-wage jobs, when they make drastic decisions based on unfounded claims. Those in charge must instead examine the facts and do more to promote equitable policies that help create a better life for all of the state’s residents.