Many States Begin to Pare Down Unemployment Benefits Once Again

As unemployment counts begin to skyrocket back down to what they were before COVID-19 struck, many states have begun to cut down on their unemployment benefits.

There are two main ways they are doing this. One is by cutting down the maximum number of weeks that the jobless may claim these benefits. The other is by cutting down on the maximum amount of money per week one may claim who is jobless in their state.

There are many common misconceptions about how unemployment insurance works. Many people believe that the jobless are paid a fixed amount per week. The jobless are actually not able to typically claim any more money than they were already earning per week.

Why Are States Cutting Back on Unemployment Insurance?

After the Great Recession ended, many states began to cut back on their unemployment insurance. The Great Recession had similar unemployment expansions to what the COVID-related unemployment insurance expansions had in store.

Largely prevalent in Republican-led states, these cutbacks are usually because lawmakers feel that workers take advantage of more lenient unemployment insurance policies. Whether workers largely do or do not do this is up for debate.

Some states have had more stagnant unemployment rates. Lawmakers in those states may be tying this lower labor participation with more generous or lengthier unemployment insurance policies.

Which States Are Cutting Down on Unemployment Insurance?

There are many states cutting down on the maximum unemployment benefits workers may claim. Some of these states had adopted the 26 week standard for maximum number of weeks that may be claimed.

First, Kentucky's legislature recently overrode the Governor's veto on their bill cutting back on state level unemployment benefits. Though Kentucky had expanded to the standard, 26-week unemployment insurance policy previously, the legislature is reversing course. It is now going to be a 12-week absolute maximum policy. This law will push Kentucky back to match the nation's shortest absolute maximum of unemployment benefits state, Florida.

The law that recently passed after the Governor's veto has verbiage in it that also tightens the criteria defining when someone must take a job or lose their unemployment compensation benefit. The new law says that when a job is thirty or less miles from someone's residence or it is remote, the worker in question is qualified to do the job, pay is 120% or more of the worker's current unemployment compensation benefits, and the person has been receiving unemployment compensation for at least six weeks, then the person must accept the job, whatever it may be.

The state's democratic Governor, Andy Beshear, publicly has railed against the bill, saying it shows the world that Kentucky cares less about those out of work than other states.

Missouri has a bill pending that will, if passed, lower the absolute maximum to eight weeks when joblessness rates across the state are mostly low. That maximum would increase to, at most, twelve weeks when joblessness rates are largely low across the state.

Several other states across the country are evaluating similar proposals.

What's Different In These Bills Than the Great Recession Era Ones?

Before the Great Recession of 2008 took place, states had widely variant unemployment insurance policies. By 2011, some standardization had taken broken off.

Before this, all fifty states had adopted a standard of 26 weeks of unemployment insurance offered for workers who found themselves without jobs. Unfortunately for those who found themselves without jobs, many states began to splinter away from this standard in 2011.

Alabama, Arkansas, Florida, Georgia, Idaho, Kansas, Michigan, Missouri, North Carolina, and South Carolina all decreased their benefits. A few states proceeded to increase their maximum number of weeks that someone who had been employed and was laid off due to no fault of their own could claim benefits.

Will These Trends Stick Around?

These trends may be worrying to those trying to figure out the post-COVID job market. After all, these unemployment reservoirs are trust funds that receive new money through payroll taxes. The monetary system behind unemployment insurance is already quite complex, so these sudden changes can add even more uncertainty for the general public.

This is a repeating cycle that happens after long periods of unemployment as some states try to seize power when they feel they have the authority to do so. Whether these are wise changes remains to be seen, but this trend is here to stay.

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