Will ending the extra unemployment benefit fix the labor shortage?

KNWA

Ark. (KNWA/KFTA) — Arkansas is one of several states now ending its pandemic unemployment assistance, weeks before the federal program is set to expire in September.

Governor Asa Hutchinson announced that the state is cutting off the enhanced benefits as a way to encourage folks to jump back into the workforce.

State leaders say the economy is turning around. Job growth is being seen in several sectors including retail, hospitality, and manufacturing to name a few. However, they are not getting the number of workers coming in to fill those jobs.

Hutchinson says the extra money helped thousands of folks who lost their jobs get through tough times during the pandemic and it has served its purpose.

Local Economist and Research Assistant at the University of Arkansas, Jeff Cooperstein says the benefit is one of many factors affecting someone’s ability to work.

“Other people need to look at child care issues, they need to look at health issues. There is still concerns about the is hesitancy about going back into the workforce because they are worried about COVID,” said Cooperstein.

He adds another factor impacting people’s decisions to rejoin the labor force is pay. For parents, the money they bring home needs to be able to offset the cost of childcare.

He adds that during the pandemic some folks also got more training, certifications and are looking for better opportunities.

“If you want to hire people, you’ve got to pay them more now… and that is probably a good thing because if people get paid more they can afford housing and they can afford these other things,” said Cooperstein.

He adds that when you pay people higher wages, it increases productivity, it increases spending and it, in turn, helps stimulate the economy.

He adds that for the people who are sensitive to the extra $300 a week some will get back to work. However, at this time, he doesn’t foresee the end of the benefits having a significant impact on the labor pool.

He adds to jump-start the labor pool, you need to attract the people who have completely left the job force altogether. For that health, safety, childcare, and wages need to all be addressed.

According to the Arkansas Division of Workforce Services, just over 50,000 people are currently receiving the extra $300 dollars pandemic benefit.

The federal unemployment programs end in Arkansas on Saturday, June 26th. This includes Pandemic Unemployment Assistance (PUA), Pandemic Emergency Unemployment Compensation (PEUC), Federal Pandemic Unemployment Compensation (FPUC), and Mixed Earner Unemployment Compensation (MEUC).

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BREAKDOWN OF THE FEDERAL UNEMPLOYMENT PROGRAMS :

Pandemic unemployment assistance (PUA) was created for workers impacted by the pandemic who are not covered by regular state unemployment insurance, such as the self-employed and independent contractors.

Pandemic Emergency Unemployment Compensation (PEUC) was created to serve as an extension of regular state unemployment insurance, so all claimants receiving PEUC have already received 16 weeks of regular unemployment insurance.

Mixed Earner Unemployment Compensation (MEUC) was created to provide an additional $100 payment to those receiving regular state unemployment insurance or PEUC benefits who earned at least $5,000 in net income from self-employment during the most recent taxable year.

Federal Pandemic Unemployment Compensation (FPUC) was originally created by the CARES Act and provided $600 additional payments to those eligible for regular unemployment, PEUC and PUA. The program expired July 31, 2020 but was reinstated by the Continued Assistance Act and provides a lower additional payment of $300. Anyone receiving regular unemployment insurance, PEUC, or PUA benefits is also receiving the additional $300 FPUC payments. While those eligible for regular state unemployment insurance will continue to get benefits when the federal programs end, they will no longer get the $300 FPUC.

  • Number of people currently being paid regular state unemployment benefits: 24,742.
  • Number of people currently being paid PUA benefits: 25,818.

Provided by the Arkansas Division of Workforce Services.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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