HUTCHINSON: Has repeatedly called for school's to reopen to in-person learning. Brian Chilson

Governor Hutchinson has added Arkansas to a shortlist including Montana and West Virginia that are going to refuse supplemental federal unemployment assistance payments of $300 a week, after June 26 .

His statement:

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Governor Asa Hutchinson has directed the Division of Workforce Services to end the State of Arkansas’s participation in the federal supplemental unemployment assistance after June 26.

 

“The programs were implemented to assist  the unemployed during the pandemic when businesses were laying off employees and jobs were scarce,” Governor Hutchinson said. “As we emerge from COVID-19, retail and service companies, restaurants, and industry are attempting to return to prepandemic unemployment levels, but employees are as scarce today as jobs were a year ago. The $300 federal supplement helped thousands of Arkansans make it through this tough time, so it served a good purpose. Now we need Arkansans back on the job so that we can get our economy back to full speed.”

I’m seeking numbers from the state on how many people this will affect.

It’s heartless and cruel and implicit in the decision is the belief that the $300 is keeping people from going back to work, though there’s scant evidence of this. This was a popular theme among legislators.

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Arkansas provides only 16 weeks of regular unemployment. The extra federal benefit was extended through Sept. 6, which means Arkansas will truncate the support 10 weeks early or about $3,000 in lost benefits per person.

I’d read yesterday about Montana Gov. Greg Gianforte’s decision to cancel the federal benefits there, also claiming a workplace shortage. He was more explicit than Hutchinson in claiming it was discouraging people from working.

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Montana is offering employers “return to work” bonuses to help them hire.

Montana is also ending the pandemic unemployment assistance on June 26 for gig workers. Hutchinson didn’t mention that program specifically.  I’m inquiring if his order covers that program as well. The gig workers qualify for no regular unemployment benefits, which means they’ll be left with nothing if their aid stops. Those who qualify for regular unemployment benefits in the state program will continue to receive it if their 16 weeks aren’t already up and they are actively seeking work.

UPDATE: Yes, in a letter to the Division of Workforce Services officially mandating the end of the payments, Governor Hutchinson makes clear he’s ending all special federal programs, including support for gig workers. It said:

…I hereby direct DWS to terminate the state of Arkansas’s participation in the Federal Pandemic Unemployment Compensation (FPUC) porogranm, the Pandemic Unemployment Assistance (PUA) program, the Pandemic Emergency Unemployment Compensation (PEUC) program, the Mixed Earner Unemployment Compensation (MEUC) program, the Emergency Unemployment Relief for Governmental Entities and Non-Profit Organizations program and the Temporary  Federal Funding for the First Week of Compensable Regular Unemployment for States with No Waiting Week program, effective June 26, 201. I am also directing DWS to provide maximum job search assistance to those Arkansans still receiving unemployment benefits so that they may transition back to employment.

 

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The Montana decision drew criticism that could equally be applied in Arkansas:

“Montana’s move to end these fully federally-funded UI programs, along with their COVID-19 exceptions, is cruel, ill-informed, and disproportionately harms Black and Indigenous People of Color and women,” Alexa Tapia, unemployment insurance campaign coordinator at the National Employment Law Project, told Yahoo Money. “Ending these programs would leave 22,459 people unable to support their families and hurt thousands more.”

The Arkansas unemployment rate on March 31 was 4.4 percent, down from a high of 10 percent last April.

The Yahoo article on the Montana decision indicates some of the flaws in these decisions.

Different papers have established that the extra $600 in benefits distributed earlier in the pandemic had limited labor supply effects and likely didn’t disincentivize work, including one by the National Bureau of Economic Research and another by Yale University. The current supplemental benefit is worth half of what those papers reviewed.

“The 100% federally-paid unemployment benefits have boosted spending and contributed to the strong economic recovery,” Andrew Stettner, an unemployment insurance expert and senior fellow at the Century Foundation, told Yahoo Money. “It’s shortsighted for the state to sacrifice that economic stimulus based on the anecdotal labor shortages concerns of a few employers, especially given the limited evidence of work disincentives from unemployment pay during the pandemic.”

Montana is the first and only state to fully opt out of the federal unemployment benefit programs enacted in the pandemic and currently extended by the American Rescue Plan signed into law in March.

As a way to incentivize workers to return to work, the state is offering a one-time return-to-work payment of $1,200, using money from the American Rescue Plan to fund the program. Only those who complete four weeks of work would receive the payment.

“Incentives matter,” Gianforte said. “Our return-to-work bonus and the return to pre-pandemic unemployment programs will help get more Montanans back to work.”

Arkansas has done a poor job of providing federal assistance, with complaints continuing about the handling of claims.

In mid-March, some 24,000 people were still waiting for the benefits they were owed because of glitches in the verification process. Presumably they may still get those someday.

It could be that paying people a decent wage with good benefits might fill jobs, too. That would never occur to the Arkansas employers. They think punishment is a better incentive.