Louisiana is poised to soon stop accepting the federal $300-a-week boost to jobless benefits a month early under a deal passed by lawmakers in the waning hours of the legislative session Thursday, a move that would make the state the latest to end the benefits over concerns from business groups that they are causing a worker shortage.

Lawmakers approved a bill to boost the state’s unemployment benefits by $28 a week starting next year. But it would only take effect if Gov. John Bel Edwards ended the state’s participation in the federal program by July 31, which appears likely. That program is giving thousands of laid-off workers $300 a week in addition to whatever they get from the state, which currently is a maximum of $247 a week.

If that happens, it would make Louisiana the latest in a string of states to end participation in the federal program to boost pay to jobless workers; more than two dozen GOP-led states have ended the program. The benefits have sparked a heated debate: Business groups say the benefits are too generous and are causing a worker shortage, while labor groups say businesses should pay a more livable wage if they want to attract workers.

“For a long time now Louisiana has had the smallest weekly benefit in the country. And we need to do better in that. Everything is a tradeoff,” Edwards said, adding that organized labor had wanted an increase in the weekly benefit for years.

Edwards expects a report soon by longtime LSU economist James Richardson on whether the state’s economy has recovered sufficiently to end the federal benefits. But he said Thursday evening he had always anticipated ending the benefits in early August, saying the state could end the benefits when most schools welcome students back. 

"So the 31st of July is not a bad compromise," Edwards said. 

The deal drew the support of the state’s largest business groups, and enraged some of Edwards’ progressive allies, including members of the Black caucus. The House voted 75-26 in favor of the legislation and the Senate voted 32-5 to send it to Edwards’ desk. Both chambers voted in the final hour of the session, which ended 6 p.m. Thursday.

“I do believe at the end of the day that we represent many varied interests,” said Rep. Chad Brown, who carried the legislation. He noted businesses in his district have complained about a worker shortage. “Vote your conscience on it.”

Though Brown, of Plaquemine, is a Democrat, a number of his fellow party members spoke against the bill in the House; debate was limited because of time constraints lawmakers instituted in the final hours of the session.

“I just really can’t believe you’re doing this – turning down federal unemployment for people who just had the hardest year of their lives,” said Rep. Mandie Landry, D-New Orleans. She dismissed the theory that the $300 extra was keeping the unemployed out of the workforce. 

"It’s based on junk science and no data," Landry said.

Sen. Jay Luneau, D-Alexandria, described the measure as a compromise that would see the state benefit increase in exchange for ending the federal payments early.

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Republicans largely supported the bill after killing a previous effort to raise the state’s miserly state benefit by $28 a week in exchange for replenishing the state’s unemployment trust fund.

“This bill now has what the businesses want, which is the ability to try to get workers to come back to work,” said Rep. Larry Frieman, R-Abita Springs.

The increase in the unemployment benefits would only go into effect if the state “ceases and does not reinstate its participation in the federal government’s supplemental unemployment benefits program” by July 31. That language was added in a conference committee report posted less than two hours before the mandated 6 p.m. adjournment of the 2021 session.

“It’s a great compromise,” said Dawn McVea, head of the Louisiana chapter of the National Federation of Independent Business. “This will allow the fund to stabilize, get folks back into the workforce and know what we are dealing with on true economic recovery.”

Louisiana has among the lowest maximum benefits in the U.S., at $247 a week, and actually has the lowest average weekly benefit in the country, according to the Louisiana Budget Project. A host of GOP-led states have opted out of the $300 federal benefit, which comes on top of whatever the states pay.

Jan Moller, head of the Louisiana Budget Project, said the Legislature has been “extremely generous to businesses,” pointing to hundreds of millions of dollars already appropriated to bail out the state’s unemployment trust fund.

“Taking away federal unemployment benefits won't help Louisiana's economy; in fact, it will do the opposite by taking away resources from people in need who would spend it in their local communities on basic necessities,” Moller said. “The least they could have done is let people who lost their job through no fault of their own keep the benefits that Congress appropriated.”

The Louisiana Association of Business and Industry, the state’s largest business lobby, had earlier this year reached a deal with the AFL-CIO and other labor groups to increase the state unemployment benefit by $28 a week. In exchange, LABI was assured the state would replenish the trust fund that pays those benefits to above $750 million. That would mean businesses wouldn’t see higher taxes that automatically kick in when the fund is depleted, like it was during the pandemic.

LABI sent a note to House members Thursday voicing its support for the bill, saying it would “avoid higher taxes for LA employers in the future.” But the Republican-dominated House, which often aligns with LABI, voted against the proposal on a 39-60 vote. The Senate had approved the original arrangement on a 36-0 vote.

That proposal had started out as a bill by Rep. Rodney Lyons, D-Harvey, but was killed earlier this session. Senators amended Brown’s instrument to tack on the deal.

After the House rejected the idea again, negotiations restarted between business and labor groups, as well as Edwards’ office and lawmakers, ending with the compromise that passed Thursday.

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