JP Morgan: 'Politics, not economics' is leading Republican governors to cut off unemployment aid
New unemployment claims fell to a pandemic low for the fourth week in a row, with a still-high but rapidly dropping 406,000 people filing for unemployment. But unemployment remains high, and 4.1 million people are on the brink of losing federal unemployment benefits that should have continued into September, thanks to Republican governors making the predictable political decision to scapegoat workers for the economy not recovering at jet-propelled speed. If you don't believe worker advocates when they tell you the Republican governors cutting off federal unemployment benefits early are doing it because of politics, would you believe it from an icon of unfettered capitalism?
"It therefore looks like politics, not economics, is driving decisions regarding the early ends to these programs," according to a document from JPMorgan. "The 23 states announcing early ends all have Republican governors, and while some of these states have tight labor markets and strong earnings growth, many of them do not." (Note: It's now 24 states.)
Pointing out that the nation as a whole is still 8.2 million jobs short of where it was in February 2020, with 10 million people looking for work and not finding it, the Economic Policy Institute's David Cooper breaks down the state data. The national unemployment rate is 6.1%, and four states—Alaska, Arizona, Texas, and Mississippi—are cutting off the $300 a week in federal unemployment aid despite having higher unemployment rates. Another four states—West Virginia, Wyoming, South Carolina, and Tennessee—have unemployment rates at 5% or above.
But that's not all: Seven of those eight states—and 20 of the 24 total states rejecting federal unemployment benefits—have also seen labor force participation decline. That means people have given up looking for work, whether because they've retired early, or because child care obligations keep them out of the paid workforce, or because the jobs just aren't there. Declining labor force participation is a red flag. Between unemployment and reduced labor force participation, "Employment is down by an average of 3.5% since February 2020 in these states. Factoring in the jobs that these states would have needed to keep up with working-age population growth, employment is 4.8% lower, on average, than where we might expect it to be had there been no recession," Cooper writes.
And that's the average across 24 states. A few of them are strikingly worse: "Texas's unemployment rate is still three percentage points above its pre-pandemic unemployment rate. The state has nearly one million people that are officially unemployed—people actively looking for jobs, but unable to find work. Florida's unemployment rate is 1.5 percentage points above its pre-pandemic rate, with nearly half a million people officially unemployed. Since February 2020, 150,000 people have left the labor force in Texas and nearly 220,000 have exited in Florida."
The economy is on its way back, and thanks to vaccination, the U.S. is unlikely to have another major COVID-19 spike (barring a variant that escapes the vaccines). But it's not there yet, and taking money from people who can't find work doesn't just hurt those people, it also hurts the economy by reducing their spending. Logic doesn't work on Republican governors, though. Neither does basic morality. So 4.1 million people are about to lose out on tens of billions of dollars in needed aid, with millions of them in states where the numbers clearly show that the jobs just aren't there.