Gov. John Bel Edwards said Thursday the extra $300 in weekly federal unemployment assistance going to the jobless in Louisiana won’t be cut anytime soon. He wants an economist to study the issue instead of rushing into a decision.
The Democratic governor’s cautious approach comes as a growing number of Republican-led states announce an end to the federal aid, arguing that the relatively generous benefits are incentivizing unemployment and impeding employer efforts to rehire workers.
Ten business groups representing Louisiana’s contractors, retailers, gas stations, restaurants, homebuilders, convenience stores and more made similar arguments in a letter sent to Edwards on Wednesday.
“We believe this additional benefit was an important short-term solution to help individuals who were adversely impacted at the start of the pandemic,” the groups wrote. “However, 13 months later, many employers are finding it near impossible to fully staff their business, which impacts the supply chain and timely delivery of goods and services.”
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Edwards said he’s reluctant to lift the benefits, which expire in September, without empirical state-level research on the impact it could have. He instructed his Workforce Commissioner Ava Dejoie earlier this week to retain an economist to “quickly” study the issue.
“It’s going to be something that we’re going to be very deliberate about,” Edwards said. “It’s not something we’re going to do prematurely.”
The governor added that Louisiana is heavily dependent on the tourism industry, which hasn’t recovered from the pandemic and is entering the slower summer season. He said this separates Louisiana from the 20 other GOP-led states who plan to halt their benefits in the next few months.
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“We still have an awful lot of people in Louisiana whose livelihoods depend on the availability of jobs related to tourism, and we know that tourism is not back,” Edwards said.
The $300 weekly bonus is added on top of the state’s unemployment benefit, which is the second lowest in the nation and maxes out at $247 a week. As of May 14, there were just under 290,000 people in Louisiana receiving the supplemental benefit, according to Workforce Commission data.
Additional unemployment benefits have become a cause célèbre among Republicans in recent weeks with several of the party’s governors in other states refusing the money on the belief that the enhanced benefits, alone, are responsible for the number of low-paying jobs going unfilled.
That movement only intensified after the latest dismal jobs report, which saw only 266,000 new jobs created nationwide, a meager showing compared to the to the million economists had predicted.
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Louisiana’s job growth has similarly plateaued in recent months, but Greg Albrecht, the chief economist employed by the state Legislature, said at hearing Tuesday that the enhanced benefits likely aren’t to blame.
When asked by Senate President Page Cortez, R-Lafayette, whether the lack of movement in the labor market was due to the $300 weekly bonus, Albrecht said, “The economic literature doesn’t show that as a big reason.”
Albrecht pointed to a handful of studies from last summer – when the federal government was adding $600 to the state’s weekly benefit – that found little evidence that the bonus disincentivized employment. Albrecht noted that in Louisiana, the biggest jump in the number of actual jobs added since the pandemic also came during that period of $600 benefits.
More recent research from the Federal Reserve Bank of San Francisco estimated the $300 federal benefits likely had “small but noticeable effects on job search and worker availability in early 2021,” though the research is preliminary. The study estimated that in the beginning months of 2021, about seven out of 28 unemployed individuals received job offers they would normally accept, but one would turn it down because of the $300 benefits.
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The letter sent to Edwards – which was signed by the influential Louisiana Association of Business and Industry and the National Federation of Independent Business – said workforce shortages were hampering Main Street’s recovery and urged the governor to follow his neighbors in Texas, Arkansas and Mississippi in cutting off the benefits.
“Only a few months ago, businesses were scaling back, reducing hours and limiting services because of the COVID-19 restrictions,” Dawn Starns McVea, Louisiana director of NFIB, said in a statement. “Now, they’re doing it because they can’t find enough people to work.”
McVea cited an NFIB report from April which found that 44% of small business owners nationwide have job openings they can't fill. She said 31% of their members have reported upping their wages to attract workers.
Jan Moller, the executive director of the left-leaning Louisiana Budget Project, said it would be "absolutely horrible policy to take unemployment benefits away from people who have suffered the most during this pandemic."
Moller echoed that Louisiana's economy is heavily reliant on tourism and energy extraction — industries that have been disproportionately hurt by the pandemic and have yet to fully recover. He added that the pandemic still isn't over and said many people still face issues with finding childcare.
"A healthy economy is not measured by an unlimited availability of people willing to work at or near the minimum wage," Moller said.
A proposal to raise the state’s unemployment benefit by $28 per week failed on the House floor Thursday. It included an amendment, tacked on by Republicans in committee, that would give residents on unemployment between $500 and $1000 to go back to work, but only if they gave up their right to claim unemployment benefits for six months.