The Biden administration said it will not seek to extend enhanced federal unemployment benefits when they expire next month, CBS News reports.
The federal government has provided unemployed workers $300 per week in additional benefits since the pandemic began last year but the aid is set to run out on September 6.
"The temporary $300 boost in benefits will expire on September 6th, as planned," Treasury Secretary Janet Yellen and Labor Secretary Marty Walsh wrote in a letter to lawmakers. "As President Biden has said, the boost was always intended to be temporary and it is appropriate for that benefit boost to expire."
The pair cited the unemployment rate, which has dropped to 5.4%, and the growth in jobs this summer.
"We still have more work to do, but the trend is clear: thanks to the grit and ingenuity of the American people and with the federal government executing on a plan to bring our economy back, our nation is getting back to work," they said.
7.5 million to lose benefits:
About 7.5 million people are expected to lose all of their unemployment benefits when the program expires.
Yellen and Walsh said it would “make sense” for some individual states to tap into funding they got from the American Rescue Plan to continue providing enhanced benefits.
"Now, in states where a more gradual wind down of income support for unemployed workers makes sense based on local economic conditions, American Rescue Plan funds can be activated to cover the cost of providing assistance to unemployed workers beyond September 6th," they said.
The Labor Department will also provide $47 million in new grants to help reemployment services on top of the $43 million in grants it announced earlier this year.
Some states already cut off benefits:
More than two dozen Republican-led states have already cut off or started the process of ending the enhanced unemployment benefits, arguing that they are a disincentive for workers to return to the labor force.
But while the moves failed to spark a hiring spree, the early cut-off resulted in a 20% drop in weekly spending in those states, according to new research, costing states about $2 billion in consumer spending.
"Clearly, if it had been the case that more people losing benefits were easily able to transition into paid work, you wouldn't see that sort of reduction and sharp reduction in spending, but that's what you saw," Arindrajit Dube, an economics professor at the University of Massachusetts Amherst and of the paper's authors, told Insider.