Economists say ending extra unemployment pay will hurt rural areas; employers claim benefits discourage work

Republican governors in at least 22 states plan to end pandemic-related federal unemployment assistance as early as next week, and that is causing some concern about the rural impact.

"The governors argue that the benefits discourage people from taking jobs. But economists say cutting off federal aid affects people’s livelihoods—especially for people of color and residents of rural areas saddled with slow job growth, lackluster transportation options and limited opportunities," Aallyah Wright reports for Stateline. "Montana was the first state to announce it would end the program, on May 4, cutting off the benefits June 27. Other states followed suit, including Alaska, Alabama, Arizona, Arkansas, Georgia, Idaho, Indiana, Iowa, Mississippi, Missouri, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia and Wyoming. All are led by Republican governors."

If those states follow through on pulling the aid, nearly 2 million workers could lose almost $11 billion in benefits, according to an analysis of Labor Department data by left-leaning nonpartisan think tank The Century Foundation. But if all states continue allowing the federal unemployment funds through their current expiration date of Labor Day, almost 16 million workers nationwide would receive $100 billion. Andrew Stettner, a senior fellow at The Century Foundation, told Wright that states have never before accepted federal funds and then turned them down.

"Some governors and the U.S. Chamber of Commerce—which also called for an end to the $300 weekly extended benefits—opposed the extra support because, they said, benefits would disincentivize people to go back to work in industries such as food service and hospitality," Wright reports. "However, there is no evidence that federal pandemic unemployment benefits had a substantial effect on employment after the $600 benefits expired in July 2020, according to a February 2021 study by a researcher with the National Bureau of Economic Research. More than half of people who received a $600 federal unemployment check returned to work before the supplement expired," according to a paper from the University of Chicago's Becker Friedman Institute for Economics.

Politicians' views on the extra aid mainly fall along party lines. Arkansas state Sen. Ronald Caldwell framed it as a question of equity. It's unfair, he said, that farmworker jobs remain unfilled while teachers and first responders must work. "We can’t stick our head in the sand and continue on with people having grocery shelves stocked and other things that have to be done," he told Wright. 

In Georgia, Democratic state Rep. Kim Schofield said jobs are going unfilled partly because employers don't pay a living wage. "We need workplace salaries to match the 21st century workplace," Schofield said. “"There are larger companies who have made billions on the backs of workers. They can now give incentives back to workers, on-site child care, or raise some of the wages up to $15 and start there."

Stettner, of The Century Foundation, told Wright that the industries experiencing the biggest shortages, such as leisure, hospitality and trucking, don't often provide job security for workers, and argued that ending benefits for all won't address those longstanding issues.