Are Expanded Unemployment Benefits Keeping People From Returning To Work? : The NPR Politics Podcast Twenty-two Republican led states are planning to roll back expanded unemployment benefits, because they say the benefits are keeping people from returning to work. Progressives argue employers need to do a better job of incentivizing workers to return. We look at what's really going on.

This episode: White House correspondent Scott Detrow, White House correspondent Ayesha Rascoe, and chief economic correspondent Scott Horsley.

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Are Expanded Unemployment Benefits Keeping People From Returning To Work?

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JULIA: Hey, NPR. This is Julia (ph) from Orange County, Calif. I'm on my way right now to the grand opening of my first restaurant. This podcast was recorded at...

SCOTT DETROW, HOST:

It is 1:06 Eastern on Thursday, May 20.

JULIA: ...Things may have changed by the time you hear this, but I'll have fulfilled my childhood dream. Here's the show.

(SOUNDBITE OF THE BIGTOP ORCHESTRA'S "TEETER BOARD: FOLIES BERGERE (MARCH AND TWO-STEP)")

AYESHA RASCOE, BYLINE: Well, congratulations.

DETROW: Exciting.

RASCOE: Yeah. I mean, I want to try new restaurants now that I'm all vaxxed (ph).

DETROW: It's a good time for it.

RASCOE: So this is a good time for restaurants.

DETROW: Hey there. It's the NPR POLITICS PODCAST. I'm Scott Detrow. I cover the White House.

RASCOE: And I'm Ayesha Rascoe. I also cover the White House.

DETROW: And back in the podcast saddle with us is our old friend Scott Horsley, who, these days, is NPR's chief economic correspondent. Hello, Scott.

SCOTT HORSLEY, BYLINE: Great to be with y'all.

DETROW: Scott, can I just say in the whole, like, reopening conversation, randomly running into you on the street a few weeks ago, you were, like, the first person I randomly ran into (laughter) on the street in a year? It was so nice.

HORSLEY: That's right. You and your wife and son were getting some takeout and I was out walking the dogs. That was great.

DETROW: Yeah. I enjoyed meeting your pooches. Well, that is a topic that we are going to kind of talk about in a way because we are talking about the current state of the economy as people start to go out and spend money on things they didn't spend before and a whole lot of other things and how this is tied up into politics.

Let's start by talking about the new unemployment claims. They fell by another 34,000 today to 444,000. Scott, to put this in perspective, you know, we're looking at a graph here of unemployment rate from April 2019 to April 2021. And it's, like, this straight, sideways line until the pandemic hit. It hits, and then, boom, it shoots straight up. And now it's slowly, steadily curving its way back down to where we were pre-pandemic. But it's not quite there yet.

HORSLEY: That's right. The unemployment rate peaked early in the pandemic at close to 15%. It's now down to 6.1%. It ticked up just a little bit last month as more people came back into the workforce. But it has been working its way down. And those weekly unemployment claims, which you mentioned - they're kind of a proxy for layoffs - they've been falling as well. And that's good to see. It means the labor market is getting better. It's still not well.

I mean, 444,000 new unemployment claims at the state level last week would be really high in pre-pandemic terms. But it's moving in the right direction. We still have about 8.5 million fewer jobs now than we did before the pandemic struck. And we still have nearly 16 million people who are collecting some form of unemployment relief.

DETROW: So, Scott, we're mostly talking unemployment today. But, you know, we've done a couple of different episodes on different things. And it's in the news a lot. There are a lot of different indicators coming at us right now. And they are presenting some very mixed and confusing messages about where the economy stands and what the recovery's like due to just the weirdness that caused the slowdown to begin with. Big picture, what are the most important trends that you are looking at and thinking about?

HORSLEY: Well, in addition to the jobs, which we watch very closely every month, we're interested to see how and where people are spending money or saving money. Consumer spending has been really strong this spring. And it's - we're starting to see some shift. You know, during the pandemic, a lot of the things we ordinarily spend money on, like travel and entertainment, were off limits.

As a result, a lot of us compensated by buying more stuff, maybe buying it online and having it delivered to our doorstep. Spending on stuff is actually way above where it was before the pandemic. Spending on services, which is everything from haircuts to concerts to massages to travel, is still lagging where it was before the pandemic, so we still have some room to go there. But it's - but those spending on services is starting to pick up, too, and that's part of that reopening that we're watching closely.

RASCOE: And, I mean, I guess when it comes to buying goods, that could be indicated by, like, all the boxes that show up in my house from Amazon or wherever. My husband says I'm getting stuff every day. But (laughter) there is this question of whether employers are able to find people to work at various places. There's this question of whether there's a labor shortage. And some states have decided that unemployment benefits from boosted by the federal government are too generous. And they're opting out of that, right? Right, Scott?

HORSLEY: That's right. We've heard a lot of grousing from employers that as people start eating out more and traveling more, they need more workers and they don't feel like they're able to hire as many workers as they would like to, as demand would dictate, at least at the wages that the employers want to pay. And we're beginning to see some employers actually raise their wages a bit in order to get workers they need.

But we were all sort of surprised when the April jobs numbers came out. There have been forecasts for a really strong month of job growth last month. And instead, we saw kind of anemic growth, 266,000 jobs added. And again, when we're still down nearly 8.5 million, that's a kind of slow pace of job growth. And a lot of Republicans argued that the supplemental unemployment benefits that the government's been offering during the pandemic might be discouraging people from looking for work.

Now, academic researchers haven't found much evidence of that. And there's - it's not necessarily the case that that's what's keeping people on the sidelines. But now we've had close to two dozen states, all of them led by Republican governors, who say they're going to end those supplemental unemployment benefits early as kind of a stick in hopes of prodding more people back to the workforce.

DETROW: And before we talk more about that, we should just pause and point out that there are a lot of alternative possible explanations for what's going on here. And you have heard progressives prominently make them. You know, among other things, people might not feel safe going out doing retail or services industry jobs, and the other - the fact that, you know, child care and schooling is still such a mess in so many places that a lot of parents, women in particularly, feel like they have no choice and they cannot reenter the workforce right now.

HORSLEY: It was interesting in the April jobs numbers, all of the people coming into the workforce were men. There were no net women coming into the workforce, that is working or looking for work in April. And that suggests maybe a lot of moms are still busy looking after kids, a responsibility that, for better or worse, often falls to moms rather than dads.

RASCOE: One thing that people will say is, OK, pay people more for these jobs to attract them. But it seems like a lot of these employers are not trying to do that. They're just, like, offering bonuses, or if you, you know, come in, they'll give you, like, a $50 gift certificate or something like that.

HORSLEY: There's a lot of anecdotal evidence of employers finding novel ways to try to bring people back to work or into the workforce. Of course, the easiest way to do that or the best way to do that is simply to raise the wage. And we are seeing examples of businesses raising wages to recruit workers. But that's - it's a step that employers are sometimes reluctant to take because once you raise wages, it's very hard to dial them back again. And I think a lot of employers feel like in the months to come, there might be more people competing for jobs. And so they don't want to offer a raise now and then have people knocking at their door in the fall who might be willing to work for a little bit less.

DETROW: And fitting into the growing theme, a topical theme of the week on the podcast, raising the minimum wage to $15 an hour is one of the countless priorities shared by most Democrats in Congress that cannot get to the finish line right now because of the dynamics in the Senate with a majority but not a filibuster-proof majority. See every other episode this week for that conversation.

All right. We're going to take a quick break. When we come back, we will talk more about what's going on with these unemployment benefits in these 22 states where Republican governors are taking them away.

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DETROW: And we're back. Scott, let's start with something that you briefly mentioned earlier, but we're going to talk in more detail about now. As this conversation has taken place and Republicans have been quick to blame expanded unemployment benefits, the federal government has passed several laws, including the most recent stimulus package, kind of beefing up what you get for unemployment benefits. Twenty-two Republican governors have now said we're not going to participate in that anymore. Those expanded benefits go away. What does that mean for people in those states? How much are we talking about here?

HORSLEY: Well, there's several different programs. One of the things that the federal government did at the beginning of this year was to add an extra $300 a week for anyone who is receiving unemployment benefits. There are two other programs. There's the pandemic unemployment assistance, which is a federal program for gig workers and the self-employed, people who ordinarily wouldn't qualify for unemployment. And then there's another program of extended benefits for people who've exhausted their regular unemployment benefits, which usually only lasts about six months. In 19 of these 22 states, they're cutting all those programs. In the other three, they're just doing away with the $300 a week addition.

Many of the states taking this stab have unemployment rates that are really low. Montana was the first state that announced a plan to end the supplemental unemployment benefits, and the jobless rate there's just 3.8%. But there are several states that are planning to unwind these supplemental unemployment benefits with unemployment rates above the national average. Texas, for example, 6.9% there.

DETROW: Ayesha, I feel like a lot of members of the Biden administration who were in the White House in the Obama years are probably having flashbacks to when Republican governors opted out of the Medicaid expansion that was part of Obamacare. How is the White House responding to what's happening here with unemployment benefits?

RASCOE: Well, the White House argues that this is not - that these expanded unemployment benefits are not keeping people from the workforce but - and they also are urging - because obviously they support a higher minimum wage and all of that, as we talked about earlier. They say that employers could try to pay people more. Like, if there is a way if you want to draw more people off the sidelines, you know, pay people a wage that makes it worth it for them to do so. But it's not really much. It's not clear that there's much that they can do about this situation.

HORSLEY: It was interesting. After that week April jobs report came out a couple of weeks ago, President Biden addressed reporters. He dismissed the argument, but he did also say that states were going to enforce the law, which is that in order to qualify for unemployment benefits, you have to be actively looking for work. That is a general requirement to cut unemployment. So a lot of states are now reimposing that work search requirement. And it's interesting, you know, there's - I'm looking at the claims data from this morning, which shows that in the week - between the last week of April and the first week of May, nearly a million people dropped off these emergency unemployment benefits, presumably, in many cases, because they found jobs. So there are certainly people who are already making the transition from unemployment benefits to work even before the governors in these 22 states start chipping away at the safety net.

DETROW: And it's interesting, this is all happening at a time where the Biden administration and Democrats in Congress have been trying so hard to kind of end that mindset that, you know, dominated the Democratic Party for decades of kind of it's-your-fault type views when it comes to social safety nets. You know, the expanded child tax credit that's just kicking in right around now being a big glaring example of the government sending money to families with children as a way to help, you know, boost their living situation.

RASCOE: And people generally like those programs. Right?

DETROW: Yeah.

RASCOE: That - like, that's the difficulty that Republicans and conservatives have faced and why they have fought so hard against programs like Obamacare. Because once you get those programs in motion, it's very difficult to unwind because people like them. They like getting the health care and they like getting (laughter) - they like getting a check to help their kids. And someone, one - a very prominent Republican, basically understood that, and his name was Donald Trump. And he understood (laughter) that people like getting checks. Put my name on the check. That's what he said. Because he wasn't a traditional conservative, right?

DETROW: Yeah.

RASCOE: So, like, that's why the conservatives who are for small government will fight so hard against these sorts of programs because people, once they are in place, will fight to keep them in place.

DETROW: All right. Well, Scott Horsley, we miss you. Thanks for coming by and visiting with us.

HORSLEY: It's always great to talk with y'all.

DETROW: All right. We will be back in your feed tomorrow, which I am led to believe is Friday, which means it will be time for our weekly roundup. Until then, I'm Scott Detrow. I cover the White House

RASCOE: And I'm Ayesha Rascoe. I also cover the White House.

DETROW: Thank you for listening to the NPR POLITICS PODCAST.

(SOUNDBITE OF THE BIGTOP ORCHESTRA'S "TEETER BOARD: FOLIES BERGERE (MARCH AND TWO-STEP)")

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