Traci Michele is an Arizona musician—the “Cowgirl Cabaret”—who lost virtually all of her gigs when the coronavirus pandemic exploded in 2020 and bars and restaurants shut down. The economy in Mesa, where she lives, is coming back, but the entertainment industry remains depressed. Backup work as a merchandise manager for a Las Vegas show has disappeared, too. Michele has survived on state and federal jobless benefits, but Arizona Gov. Doug Ducey canceled the $300 per week federal payment, beginning July 10, as part of the state’s “back to work” program. Instead, Arizona is offering $2,000 bonuses to people who accept a full-time job.
“I’ve sent out well over 100 resumes,” Michele says. “I rarely get replies, much less interviews. I don’t know what went through Doug Ducey’s head when he decided to end the $300 benefit. All it has done is put me and I’m sure thousands of others into some kind of tailspin.” Michele has enough savings to cover about one month of bills. “Then,” she says, “I just hope some miracle happens and I’ve gotten a job or, I’ll be living in my car.”
Republican governors in 26 states have prematurely ended the $300 jobless benefit Congress extended into early September as part of the American Rescue Plan Congress passed in March. The rationale was to address labor shortages and prod people back to work by slashing the incentive to stay home. But several studies show that only about 15% of unemployed workers, at most, are avoiding work because jobless aid pays more. Many others, like Michele, simply can’t find work in their field. Some are still worried about the risk of coronavirus in the workplace. Millions of parents, women especially, have lost child care or been forced to stay home to manage kids going to school remotely. Some older Americans have retired prematurely.
Governors 'wanted to make a statement'
A recent study by Arindrajit Dube, an economics professor at the University of Massachusetts, Amherst, found that killing jobless benefits in Republican states intensified financial hardship without doing anything to boost employment. Oxford Economics estimates that the GOP benefit termination affects about 3.5 million unemployed Americans. If 15% of those people are dodging work because of jobless aid, then about half a million workers will be getting off the couch when the checks stop coming. But 3 million will lose an important source of support with no change in their motivation to get a job. The $300 federal weekly payments are due to expire in early September, so the typical worker losing two months of benefits is out about $2,400.
“The response to the additional unemployment benefit was politicized,” says a software sales executive in Ohio who asked Yahoo Finance not to use his name. “I come from the data world, and the red state governors simply wanted to make a statement. They didn’t substantiate the decision with any data. It was really just a political attempt to bring back the waiters and waitresses and staff the fast-food restaurants.”
The Ohio executive’s work relies on travel and in-person meetings, and it mostly disappeared during the pandemic. He says he has sent out “countless” resumes for posted positions, but has had just one serious conversation with a potential employer. He received federal jobless benefits until Ohio Gov. Mike DeWine canceled them, effective June 26. “I don’t need the $300 to survive,” he says, “but all the removal of the $300 federal benefit accomplished is to remove that income from the cash injected into our Ohio economy. Genius, huh?”
'Completely cut off'
Raymond Powers of Johnson City, Tenn., is one of those workers staying home because of Covid concerns. He has a medical condition that weakens the immune system, and when the pandemic hit last year, he quit working as an equipment operator at a retail distribution center for health reasons, qualifying for both state and federal jobless benefits. Both ended on July 3, after Republican Gov. Bill Lee ended the state’s participation in the program. Powers’ wife will start working soon, after an impasse caused by an injury, but his family of five will lose about $4,600 in foregone benefits from July to September.
“Some people have been taking advantage of the system,” Powers says. “I’ve worked my whole life and done a lot of hard work. I got completely cut off because of this play our governor did. I’m not trying to say anything bad about him, but it’s sure killing me right now.” Powers is going back to school in the fall to learn advanced manufacturing, with a federal Pell grant that will help cover expenses, in addition to a part-time job he expects to get. Until then, he says, “I haven’t figured it all out. We’re just winging it one day at a time.”
Others losing jobless aid are less charitable toward their elected leaders. Amanda of Houston, who asked Yahoo Finance not to use her last name, is married to a commercial real-estate broker who watched deals fall through as the pandemic upended real-estate valuations and business decisions. The couple qualified for state and federal jobless aid, which helped pay for car and appliance repairs and basic expenses.
In May, when the first Republican governors began to opt out of the federal program, Amanda got nervous. “Every day I saw the news, I’d think, please Texas, don’t do this to your people. Keep the program. Show your support.” But Gov. Greg Abbott followed the Republican script and canceled federal benefits, effective June 26. As a self-employed broker, Amanda’s husband Kerry isn’t looking for a $15-an-hour retail job. He’s trying to work out deals that take months or years to execute.
“We felt this would give him a cushion until September to get his business restarted,” Amanda says. “Now, we’re down to a couple hundred dollars in the bank, and we’re behind on auto insurance.” As for Abbott, she says, “I voted for him in the previous election, but I would not vote for him if he was the last candidate running. He has turned his back on everybody.”
Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.