Twenty-five Republican-led states are planning to cut off enhanced federal unemployment benefits, but the move could significantly damage their economies, Insider reports.
At least 25 states plan to end the Federal Pandemic Unemployment Compensation (FPUC) nearly two months before it is set to expire in September.
The program provided laid-off workers $300 per week in federal unemployment benefits.
Republicans have argued that the generous benefit has prevented people from returning to work and has made it difficult for businesses to reopen.
Existing data has not shown evidence that the unemployment benefits are discouraging people from returning to work. Democrats have argued that the slow rate of return among laid-off workers is due to a lack of child care options.
Economic damage:
The 25 states are expected to cost their local economies $12 billion, according to a report from the bipartisan Joint Economic Committee.
The committee said that cutting the benefit early would reduce the amount of disposable income that residents have to spend and hamper economic recovery.
While it is unclear when each state will cut off the benefit, the report said that the earlier they do so, the more money their economies would lose.
Extra cash has been a boon:
Despite the Republican criticism, the unemployment benefits have been a boon to local economies.
The committee estimated that every dollar paid out in unemployment benefits generated $1.61 in local spending.
Texas stands to lose the most with $3.51 billion, according to the report. About 7.5% of the state’s labor force -- more than 1 million residents -- have been receiving FPUS since April.
Ohio stands to lose about $1.91 billion. Nearly 10% of the state’s labor force has been relying on federal unemployment assistance.
"By ending these programs early, states are refusing billions of already appropriated federal dollars that could be spent in local groceries, restaurants, and retail shops," the committee said.
