GOP Governors' Cutoff of COVID Benefits Hits Hard in Rural America

This story was originally posted by Stateline, an initiative of the Pew Charitable Trusts.

After Lisa Wilkinson, 54, got laid off from her factory job in December 2019, she knew it would be difficult to replace it. She's older and lives in rural Tennessee, where work is scarce.

She immediately began her search, but in March 2020, COVID-19 forced employers to shut their doors.

She applied for state and federal pandemic unemployment and received $300 a week plus back pay in June 2020—a lifeline, she said in an interview. Several weeks later, the benefits ran out, and she still couldn’t land a job. Then, in the midst of that, Wilkinson, her 79-year-old husband and her 82-year-old mother contracted COVID-19.

Wilkinson recovered, but her husband and mother did not.

“If you’re not a saver, you lose everything you got. And if you lost a spouse or member in your family—last year, this year—it makes it worse,” Wilkinson said. “You have anxiety, depression … and thoughts of where your next meal is coming from.”

Wilkinson feared for her health and that of others if she entered the workforce, but she kept applying anyway, she said. To date, she has sought more than 300 jobs. Since January, she has recertified and reapplied for extended benefits at least three times. Her claim is still processing, she said.

Now, she’s waiting—on unemployment benefits or a job, whichever comes first.

“People are like, ‘Jobs [are] out there, if you need ‘em,’” she said. “But they’re not the ones trying to apply for ‘em.”

In at least 22 states, the federal unemployment assistance Wilkinson is fighting to get is being retracted by Republican governors, who plan to end the pandemic-related aid as early as June.

The governors argue that the benefits discourage people from taking jobs. But economists say cutting off federal aid affects people’s livelihoods—especially for people of color and residents of rural areas saddled with slow job growth, lackluster transportation options and limited opportunities.

“We know [communities of color in rural areas] suffer from chronic high unemployment and have been really hurt by the pandemic, so I do think that this is an issue that’s gonna be hitting different communities harder,” said Andrew Stettner, a senior fellow at The Century Foundation, a left-leaning independent think tank.

“We saw in the data that African Americans are really taking advantage of these programs,” he said, “and they’re going to be hurt by the revocation of some of these programs. I would say economic distressed communities, writ large, are going to be losing out on a lot of these benefits.”

About 16 million people nationwide would receive a total of $100 billion in benefits if all states continued federal unemployment funds through their set expiration date of Labor Day, Sept. 6, according to an analysis of U.S. Department of Labor data by The Century Foundation. Of the states that planned to pull benefits, almost $11 billion in unemployment benefits could be lost, affecting nearly 2 million workers, the analysis found.

States have never before made this reversal—accepting the federal funds, then turning them down—Stettner said.

Montana was the first state to announce it would end the program, on May 4, cutting off the benefits June 27. Other states followed suit, including Alaska, Alabama, Arizona, Arkansas, Georgia, Idaho, Indiana, Iowa, Mississippi, Missouri, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, West Virginia and Wyoming. All are led by Republican governors.

Focused on Vacancies

Economists told Stateline that the decision to opt out of pandemic unemployment affects the recipients who receive the funds, which in turn reduces the flow of money into local economies.

Some Republican governors are focusing on filling job vacancies.

“Eliminating these pandemic programs will not be a silver bullet for employers to find employees, but we currently have about 116,000 available jobs in the state,” said Indiana Gov. Eric Holcomb in a statement.

U.S. Labor Secretary Marty Walsh and President Joe Biden’s administration will “take concrete action to prevent anyone from falling through the cracks,” a spokesperson from the U.S. Department of Labor said in a statement. The statement doesn’t specify whether states are required to continue providing payments, as some advocacy groups have argued the department could force them to do.

Some governors and the U.S. Chamber of Commerce—which also called for an end to the $300 weekly extended benefits—opposed the extra support because, they said, benefits would disincentivize people to go back to work in industries such as food service and hospitality.

However, there is no evidence that federal pandemic unemployment benefits had a substantial effect on employment after the $600 benefits expired in July 2020, according to a February 2021 study by a researcher with the National Bureau of Economic Research.

More than half of people who received a $600 federal unemployment check returned to work before the supplement expired, found a separate February paper from the University of Chicago Becker Friedman Institute for Economics.
 

Many lawmakers’ views on the extended benefits fall along partisan lines.

Arkansas Gov. Asa Hutchinson said it’s time for employees to work to bring the economy up to speed.

“The $300 federal supplement helped thousands of Arkansans make it through this time, so it served its purpose. Now we need Arkansans back on the job,” Hutchinson said in a May 11 statement.

Caldwell pointed to available jobs in the agriculture field in his state. People who are unemployed, but afraid of getting COVID-19, he said, have to “balance their fear of going to work.

“It’s not very fair for working class people to get up every day and people stay at home because they afraid to get sick,” Caldwell said in a phone call. “Teachers, first responders are going into the field. I know [COVID-19] is very real, but we can’t stick our head in the sand and continue on with people having grocery shelves stocked and other things that have to be done.”

Across the aisle, Arkansas state Rep. Fredrick J. Love, a Democrat, said painting the community with a broad brush hurts households.

“In rural Arkansas, some [businesses] aren’t coming back. Some are permanently closed,” Love said. “If people qualify for pandemic unemployment, it’s apparent they were working before. I think they’re looking for work and can’t find it or it was less [money] than they were looking for.”

In Georgia, state Rep. Kim Schofield, a Democrat, said the responsibility rests in part on some employers who don’t pay livable wages.

“We need workplace salaries to match the 21st century workplace,” Schofield said. “There are larger companies who have made billions on the backs of workers. They can now give incentives back to workers, on-site child care, or raise some of the wages up to $15 and start there.”

Although it's challenging for smaller businesses to find employees, there isn’t a broad labor shortage, and people would go to work if jobs were available, said Wayne Vroman, an economist with The Urban Institute, an economic and social policy D.C.-based think tank.

Vroman added that the unemployment cutoffs put rural people of color at a larger disadvantage because they face higher unemployment rates. Although rural people don’t participate in unemployment programs as much, there are many who do, and if cut off from the benefits, would suffer, Vroman said.

David Cooper, a senior economic analyst at the Economic Policy Institute, a nonprofit think tank in Washington, D.C., said the true indicator of a labor shortage is rising wages, but there’s not accelerating wage growth across the board.