Gov. Asa Hutchinson on Friday (May 7) stopped the state’s participation in federal supplemental jobless benefits which provided an extra $300 a week to those who qualified. The move comes as U.S. jobless data showed far fewer returning to work than expected.
The $1.9 trillion American Rescue Plan signed into law in early March by President Joe Biden included $300-a-week federal unemployment benefits through September. The plan also included $1,400 per-person stimulus checks and $350 billion to state, local and tribal governments to cover deficits resulting from the pandemic. The $300 a week equals a $15,600 annual salary.
“The programs were implemented to assist the unemployed during the pandemic when businesses were laying off employees and jobs were scarce,” Gov. Hutchinson said in a statement posted Friday afternoon. “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.”
The move ends the benefits about 10 weeks before they were set to expire. Gov. Hutchinson noted that Montana and South Carolina also opted out of the federal pandemic unemployment assistance programs.
Friday morning the U.S. Bureau of Labor Statistics reported that payroll employment rose by just 266,000 in April, well below what most economists expected. The national jobless rate rose from 6% in March to 6.1% in April. The Dow Jones estimated 1 million new jobs and a jobless rate of 5.8%.
Also, the March estimate of 916,000 new jobs was revised down to 770,000 by the BLS, and the February estimate of 468,000 was revised up to 536,000. The BLS also reported a big gain in tourism sector jobs with the April report.
“In April, employment in leisure and hospitality increased by 331,000, as pandemic-related restrictions continued to ease in many parts of the country. More than half of the increase was in food services and drinking places (+187,000). Job gains also occurred in amusements, gambling, and recreation (+73,000) and in accommodation (+54,000). Although leisure and hospitality has added 5.4 million jobs over the year, employment in the industry is down by 2.8 million, or 16.8 percent, since February 2020,” the BLS reported.
Some economists and GOP politicians argued that jobless benefits are too much and prevent some people from returning to the workforce. U.S. Treasury Secretary Janet Yellen argued that the benefits do not inhibit people from returning to work.
“We knew it would be a long road back to the recovery. That’s why the legislation provided lasting support rather than just a few months of relief. We knew this would not be a 100-day battle. Today’s jobs report underscores the long haul climb back to recovery,” Yellen, who is also a former Federal Reserve Board Chair, told reporters during a White House press briefing held Friday.
Mervin Jebaraj, director of the Center for Business and Economic Research at the University of Arkansas, called it a “misperception” that expanded unemployment benefits prevent people from entering the workforce. He pointed to Yellen’s comment that job growth was high in sectors with low wages. If expanded benefits were truly an obstacle to people entering the workforce, this sector would not have been the leading sector for job growth.
“This (high return of jobs in the tourism sector) is a key point we are missing in all the talk about unemployment insurance. The supply of labor is still higher than demand,” Jebaraj noted.
The economist also added this via Twitter: “If we want to jumpstart employment growth again, we have to do something about our ridiculously low vaccination rates. We can’t return to normal childcare, schools, and employment till we get more people vaccinated. Offer all the incentives it takes to get there.”
Other factors mentioned that prevent people from returning to the workforce include health concerns about returning to a work environment before more people are vaccinated, child care issues, being in a temporary layoff until an employer reopens, and baby boomers who retired early or decided to work part time.