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No Gain, Only Pain: Southern governors will slow economic recovery, hurt half a million families with unemployment benefit cuts

Mississippi, Alabama, Georgia and, most recently, Florida plan to cut the lifeline on which nearly a quarter of workers in the Deep South have relied – federal pandemic unemployment benefits.

The press releases accompanying these decisions have ignored the facts to sell us a story to take away the extra $300 people receive each week, among other assistance. Losing the pandemic unemployment benefits will immediately hurt over half a million workers and their families and cost our region more than $2.6 trillion in federal funds, according to The Century Foundation, a progressive think tank.

However, that’s what will happen in July when governors of these four states stop participating in the program, despite the federal government making the program available to states until Sept. 6. The reason these governors have given for refusing federal unemployment benefits holds no water. They recited tired partisan talking points that unemployment compensation was causing a massive labor shortage. But that’s not what’s happening.

The Deep South has unemployment rates below the national rate and low-paying jobs have seen faster growth across the country than in other parts of the economy. It’s not a labor shortage when we still have 7.6 million fewer jobs than in February 2020.

But politicians in the region have shown whom they fight for and whom they are willing to hurt.

Cutting federal unemployment compensation to economically vulnerable workers benefits business owners by depressing wages and filling poverty-wage jobs – despite the economic cost to the region and the suffering of its families. That heavy cost will be borne mainly by Black workers and mothers without a college degree. In other words, people these governors don’t consider their constituents.

Mothers without a bachelor’s degree have seen higher levels of unemployment and were more likely to leave the labor force during the pandemic. They also are more likely to be women of color, according to the Center for Economic Policy Research. Alabama and Mississippi have the second- and third-highest rates of unemployed women in the country, with Georgia and Louisiana still in the top 10.

Across the country, Black workers are facing an unemployment rate that is nearly twice that of white workers. Even more concerning is that Black workers are more likely to experience long-term unemployment.  

Despite gains in new hires, in April and May 2021, there were 3.8 million workers who had been out of work for more than half a year, according to the U.S. Bureau of Labor Statistics. This represents an increase of 2 million people who have been long-term unemployed since February 2020.

Workers who have been unemployed more than half a year are about 41% of the unemployed workforce nationally, according to Bureau of Labor Statistics data for May. That’s nearly three times the 70-year average. What we learned from the last recession is that long-term unemployment is likely to remain high after the economy enters a recovery. It appears this is happening in parts of the Deep South as evidenced by the portion of workers receiving one type of pandemic unemployment benefit known as Pandemic Emergency Unemployment Compensation (PEUC).

While Pandemic Unemployment Compensation (PUC) gives workers a $300 boost to their weekly unemployment benefits, PEUC gives workers up to 53 weeks of additional unemployment compensation to ease the financial pain of long-term unemployment.

Workers receiving PEUC may be the group that suffers most by these governors’ decision to withhold federal unemployment benefits. In the first week of May, there were more workers receiving PEUC in Alabama than regular unemployment benefits and federal pandemic unemployment assistance combined. Mississippi’s share of PEUC claims has been hovering near a third of all workers receiving unemployment since January. Georgia and Florida have not reported how many workers in their states receive PEUC, making it harder to see how many workers have been unemployed long-term.

These four Southern states don’t have to take this path. In nearby Louisiana, for example, Gov. John Bel Edwards has kept federal unemployment benefits available in the state. He deserves praise for this decision that will help so many Louisianans.

At the same time, we must hold accountable governors in Alabama, Florida, Georgia and Mississippi. We must fight for better-paying jobs and financial security for Black workers and women. This region can support businesses that give workers good-paying jobs and security. We cannot allow politicians to sacrifice our communities’ well-being for employers that demand people accept poverty wages.

Wingo Smith is a regional policy analyst for the SPLC Action Fund.

Photo by Allen Eyestone via Imagn Content Services, LLC