Louisiana Unemployment Update – Questions and Answers
Governor John Bel Edwards announced today that Louisiana will pursue the option under President Donald Trump’s executive order to provide additional assistance to unemployed residents. He believes the option will give about 454,000 Louisianans who are unemployed $300 a week. But there are questions – including the future of federal enhanced unemployment benefits – which should be answered by Louisiana lawmakers and citizens. Below are some possible questions to consider. In addition, consider the effects of ending the supplemental benefit for self-employed and gig workers on the job search and worker availability.
Louisiana to end federal enhanced unemployment benefits
In a stinging critique of the Republican-dominated Louisiana legislature, advocates for low and moderate-income families are calling the measure a “short-sighted political solution.” This legislation, which will eliminate up to $300 a week in federal enhanced unemployment benefits, is not aimed at restoring the state’s economy, but at depriving low-income residents of the opportunity to find jobs. But the legislation still has some flaws, including the fact that Louisiana’s economy relies so heavily on oil and tourism jobs, which are both suffering from a downturn. Also, Louisiana’s economy is already strained by the COVID-19 virus, which has been spreading throughout the nation.
Last week, Gov. John Bel Edwards announced that Louisiana would end the federal enhanced unemployment benefits to nearly 150,000 people in the state by the end of July. That marks the end of the state’s participation in federal assistance programs and signals a start of the recession. The decision to end the enhanced benefits early, five weeks before the official expiration date, came after business leaders and labor unions said the increased benefits were encouraging jobless people to stay home.
Governor Edwards agreed to opt out of the federally funded programs, citing the recovering economy and workforce shortages. The first Sunday of each calendar quarter is a re-evaluation of the time period used to determine eligibility. As a result, more than nine states will end enhanced federal unemployment benefits this week. That means that more than 25 states will be without the weekly supplemental payments. The state’s governor said he hoped to reach an “achievement” for workers by ending the enhanced benefits.
While this decision could lead to long-term harm for the state’s economy, it could provide a temporary relief to people struggling to find jobs. In addition to the short-term economic damage, this policy also has an impact on those working in the hospitality and travel industries. In August, 40% of recipients will need to find a job. The state’s official unemployment search website, HiRE, reports that 50,000 positions are vacant at the end of June. The governor said the tradeoff is worth the long-term goal of improving jobless benefits in Louisiana.
Extension of state’s unemployment insurance program through 2021
The American Rescue Plan Act provided a large boost to the unemployment insurance program. It extended benefits until 2021 and included additional federal funds to increase the Child Tax Credit. The benefits have also been extended for self-employed individuals and independent contractors. The federal government funded 100 percent of the new program, which enables states to waive one-week waiting periods and work search requirements. This extension will benefit millions of Americans who have lost their jobs, and is a major step toward recovery for our economy.
The basic state benefit will remain in effect until Sept. 6, 2021, and is available to those who qualify. This will help both self-employed filers and UI recipients who have reached 26 weeks of unemployment. In recent years, the number of active filers has declined. While the number of eligible filers is down from May to May, it was more than six-thousand in May. Nonetheless, the state unemployment insurance program will continue to offer some benefits until the end of September 2021.
The CARES Act allows states to continue extending unemployment insurance benefits, including the Pandemic Emergency Unemployment Compensation (PEUC). The PEUC program covers unemployment benefits for up to 13 weeks after implementation and ends on or before Dec. 31, 2020. This program covers most people, but not all. It is important to note that this program is only available for full-time employees and does not apply to part-time or freelance workers.
This extension of the unemployment insurance program would bring enormous economic gains. Approximately $441 billion in income would be generated, and that is 3.5% of GDP. It would also create an estimated 5.1 million new jobs. If not, it would be up to Congress to decide when to cut off the benefits. The next administration should make this a priority. After all, it is our economy that needs these jobs and we need every tool possible to help those in need.
The federal Pandemic Unemployment Assistance ended on September 4, 2021. The remaining benefits would not be paid until after September 5, 2021. The state unemployment insurance program, or PUA, was established to provide aid to jobless individuals who have exhausted the federal unemployment benefits. The PUA was designed to provide up to 79 weeks of benefits for self-employed, part-time and non-UC workers. The PUA also covered individuals who had exhausted their rights to regular unemployment compensation, such as those who were affected by COVID-19.
End of federal supplemental program for self-employed workers and gig workers
This past Spring, many people were surprised to hear about the number of Louisiana gig and self-employed workers that were laid off. While many of them held additional jobs, many relied solely on their gig for their income. While many were not able to find new jobs, 52 percent lost their jobs or saw their hours cut. These people are not eligible for unemployment benefits because they are self-employed. However, there are several programs that offer benefits to these self-employed and gig workers.
In Indiana, the governor has announced that the state will no longer participate in the federal supplemental program for self-employed and gig workers. In addition, Republican governor Kim Reynolds announced that Iowa is ending the federal program for self-employed and gig workers, which is responsible for providing $300 a week for the unemployed. This program is due to end on June 12, and the state is restoring work-search requirements.
The PUA program is a temporary benefit available to those who need it the most. While it was created for the self-employed and gig workers who are out of work, it is also intended to help those who are unable to qualify for regular state unemployment benefits. This program was created for Americans who are unable to work because of the COVID-19 pandemic. Since self-employed workers generally do not contribute to the regular state unemployment program, it is crucial to provide these individuals with assistance to help them get back on their feet.
Effects of ending supplemental benefit on job search and worker availability
Economists are divided about whether the withdrawal of federal supplemental unemployment benefits has an impact on job search and worker availability. The end of benefits in 26 states could increase the likelihood of job seekers moving into the labor market. While the benefits may not stop people from seeking jobs, it is possible that the loss of this assistance will reduce family income. But a recent study from Goldman Sachs found little evidence that it has. State-by-state job growth in those states that end the benefit early was about the same as for states that did not.
Economists at the Federal Reserve Bank of San Francisco have said that the loss of the supplemental benefit has a limited impact on job search. They point out that other companies are offering higher pay and incentives to attract people away from the benefits. So while the reduction in supplemental benefits may reduce unemployment, it is not a major impact and will take some time. However, it will increase the number of jobs available.
In contrast, sustained UI generosity may have substantial disincentives to job search. While the supplemental benefits are not likely to discourage individuals from searching for a new job, they can lead them to accept a job offer if the pay is more than what they would otherwise earn. Moreover, this policy change may encourage the hiring of new workers and boost the economy. A recent study showed that increased unemployment insurance benefits decreased the number of job offers for unemployed people, and workers who were able to find a new position were more likely to accept these better paying ones.
The effects of ending supplemental benefits on the labor market will be felt more in states with higher unemployment rates. This change will have a larger impact on states with higher unemployment rates, and it could also be a significant factor for the recovery in employment rates. However, the impact will not be seen until mid-August, when the additional federal unemployment benefit will have reached its national expiration date. This policy change will help us to get a clearer picture of employment recovery.