U.S. jobless claims fall again as some states end federal aid

In this Monday, May 17, 2021, photo, Kansas Gov. Laura Kelly tours a COVID-19 vaccination clinic for students aged 12 through 15 set up in a gym at Topeka High School in Topeka, Kan. The Democratic governor is under increasing pressure to end an extra $300 a week in benefits for unemployed workers, with critics of the aid arguing that businesses are having problems hiring enough workers because of it. (AP Photo/John Hanna)
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AP Economics Writer

WASHINGTON (AP) β€” Fewer Americans sought unemployment benefits last week β€” the latest encouraging sign for the rebounding U.S. economy β€” just as Republican-led states are moving to cut off a federal benefit for the jobless.

Twenty-two states, from Texas and Georgia to Ohio and Iowa, plan to begin blocking a $300-a-week federal payment for the unemployed starting in June, according to an Associated Press analysis. All have Republican governors and legislatures.

Recipients have been able to receive the $300 federal benefit on top of their regular state unemployment aid. The payment, which lasts nationwide until Sept. 6, was included in President Joe Biden’s $1.9 trillion financial rescue package.

The states that plan to cut off the federal benefit represent nearly every one that is controlled fully by Republicans. Florida is considering ending the supplemental payment. And Nebraska, which officially has a nonpartisan legislature, has said it will maintain the payments while it evaluates all pandemic-related jobless benefits.

The move is also being considered in two additional states that have Democratic governors, Kansas and Wisconsin, though the Wisconsin governor is likely to veto any rollback passed by the legislature. As a result of the action, about 3.5 million people will have their benefits reduced in the coming months, according to Oxford Economics.

Those cutoffs coincide with a steady decline in the number of Americans seeking unemployment aid, which fell last week to 444,000, a new pandemic low, the Labor Department said Thursday. Jobless claims have now dropped in five of the past six weeks, a sign that the economy keeps strengthening as consumers spend freely again, viral infections drop and business restrictions ease.

In addition to ending the extra payment, most of the same states are also withdrawing from programs that provide jobless aid to self-employed or gig workers and to people who have been unemployed for more than six months.

Among them is Latricia Hampton, who worries that without the $300 weekly federal check, she will fall behind on her mobile phone and internet bills.

“Those smaller bills are what I’m going to have to get rid of,” said Hampton, 40, who lives in Gary, Indiana. “That might not sound like much to some people, but that’s another barrier to me finding work. That’s my kids who can’t do schoolwork at home on the computer.”

Hampton had worked at a hair salon near Gary until last April, when it shut down because of the pandemic. Now, she spends hours a day applying for jobs on her phone but has yet to make it past the interview stage. She also has had trouble finding jobs that fit with her two young children’s schedules, who are 4 and 8.

“It’s not like I can just go pick up a job at McDonald’s, and that’ll solve my problems,” she said. “I have two young kids. They need me, and when I’m not there, they need to be cared for. I’m a working-class single parent. We still need help in this pandemic, not pushed off the edge of a cliff and told to fly again.”

About 16 million people were receiving unemployment benefits during the week ending May 1, the latest period for which data is available, the government said Thursday. That is down from 16.9 million in the previous week, and it suggests that some Americans who had been receiving aid have found jobs.

In Oklahoma, Republican Gov. Kevin Stitt said this week that the state will end the federal benefit on June 26. That was unhappy news for Gilbert Cruz and his wife, Marrissa Enloe-Cruz, whose graphic design company in Tulsa has suffered a collapse in business since the pandemic struck.

Both received jobless aid under the program for self-employed. Now, they’re unsure what they’ll do, especially because they’re uneasy about sending their 7-year-old son back to school before being vaccinated.

“It’s going to mean picking and choosing what bills to pay, or getting behind on things,” Enloe-Cruz said. “It will mean whether or not we’re able to put food on the table.”

Eliminating the $300-a-week payment is one of several measures that states have taken to restrict or eliminate jobless aid and press more recipients to seek work. That trend gained momentum after the April jobs report, released earlier this month, showed that employers added far fewer jobs than expected, in part because many couldn’t find enough workers.

Research suggests that roughly half the unemployed are receiving more income from jobless benefits, when you include the weekly $300 federal supplement, than their former jobs paid them. An analysis by Bank of America found that people who earned under $32,000 at their old jobs are likely now receiving more in unemployment aid than they did from working.

Yet some point to the steady decline in the number of Americans receiving jobless benefits as evidence that most of the unemployed are still willing to take jobs when they’re available.

“Today’s data indicates that unemployment aid is not keeping workers on the sidelines,” said Andrew Stettner, a senior fellow at The Century Foundation. “Emergency unemployment aid is doing what it is meant to do: Serving as a temporary lifeline while workers search for and return to work.”

In July last year, four months after the pandemic tore through the economy, roughly twice as many people as now β€” 32 million β€” were receiving some form of unemployment benefit, though that figure was likely inflated by fraud. As recently as late February this year, about 20 million people were receiving aid.

Even so, 19 states say they will also cut off all benefits for the self-employed and gig workers, who became newly eligible for jobless aid under a relief package that was enacted in March last year. They will also drop out of a federal program for people who have been out of work for more than six months.

Those moves will end all benefits for approximately 3.6 million of the nearly 16 million people receiving aid β€” about one in four of current recipients β€” according to the Century Foundation.

In addition, 35 states have reinstated a requirement that jobless aid recipients search for work in order to keep receiving benefits. That requirement had been suspended at the start of the pandemic, when many businesses were closed and Americans were encouraged to stay at home.

In Dayton, Ohio, work evaporated for Terri Ashman, a house painter, and her husband, Steve, a remodeler, after the pandemic hit in March of last year. They struggled to obtain unemployment benefits because of delays that resulted from a flood of applicants that overwhelmed many state workforce agencies.

Eventually, they did receive aid and began to save money, in part because of the $300-a-week federal payment. By then, they had moved in with Terri’s mother after a period of homelessness.

They now have nearly the entire $8,000 payment they need for their new home in Celina, near Dayton. They are required to pay a year’s rent because of their credit problems.

But the two have little else saved and were counting on the continued federal payments through September to pay bills. Terri Ashman, 54, just received her second coronavirus vaccine shot, but she struggles with asthma and high blood pressure. She said she is willing to work even minimum wage jobs. But first she needs to get back on her feet.

“We finally were almost able to crawl out of this hole,” she said. “Without (the $300), we’re going to be living on the edge of the cliff.”