The number of unemployment-benefit recipients is falling at a faster rate in Missouri and 21 other states canceling enhanced and extended payments this month, suggesting that ending the aid could push more people to take jobs. Federal pandemic aid bills boosted unemployment payments by $300 a person each week and extended those payments for as long as 18 months, well longer than the typical 26 weeks or less. The benefits are set to expire in early September, but states can opt out before then.
Missouri Gov. Mike Parson said the benefits were helpful during the height of the pandemic, but their continuation has “worsened the workforce issues we are facing.”.
He, like many other Republican governors, moved to end the federally funded benefits to address businesses’ concerns about a labor shortage. The state’s unemployment rate was 4.2% in May, well below the national average of 5.8%, according to the U.S. Labor Department.
Missouri cut off payments as of June 12, joining three other states as the first to do so. Seven states followed with an end on June 19, and this weekend, benefits are expiring in 10 more states. Four more states will curtail benefits by July 10.
The number of workers paid benefits through regular state programs fell 13.8% by the week ended June 12 from mid-May—when many governors announced changes—in states saying that benefits would end in June, according to an analysis by Jefferies LLC economists. That compares with a 10% decline in states ending benefits in July, and a 5.7% decrease in states ending benefits in September. Workers on state programs would lose the $300 weekly federal enhancement but could continuing receiving the state benefits.
Jefferies also found somewhat larger decreases in the number of people receiving benefits through pandemic programs in states curtailing benefits, though the data lags behind by an additional week. In many cases, those recipients will be cut off entirely when their state ends participation in the federal programs.
“You’re starting to see a response to these programs ending,” said Aneta Markowska, Jefferies’ chief financial economist. In recent months “employers were having to compete with the government handing out money, and that makes it very hard to attract workers.”
Other economists and many Democrats say other factors, including lack of child care and fear of Covid-19, are also keeping many potential workers out of the labor force.
Some businesses in Missouri are already noticing a difference since the policy shift.
Midas Hospitality, a St. Louis-based hotel company with 44 locations around the U.S., started holding job fairs to increase staffing as coronavirus restrictions eased about two months ago. In many cases, no one showed up, said Linda Eigelberger, senior vice president for operations and marketing. Other times, only two people would arrive, immediately get offered jobs and then not show up to start work, she said.
Then a few weeks ago, things began to change at its Missouri locations. At one property, seven people came to a job fair, which Ms. Eigelberger took as a positive sign. Then, two weeks ago, the Element St. Louis Midtown hotel had a breakthrough with 40 job seekers, she said.
“It’s crazy how quickly” things seem to be ramping up, she said, noting that workers in other states where Midas operates and the federal benefits are still in place appear reluctant to re-enter the workforce.
The hotel had 11 openings, including housekeeping, front desk and food-service jobs, Ms. Eigelberger said. It offered positions to nine job seekers at the fair, and all of them arrived for their first day of work. Several of the new hires had been out of work for at least six months.