South Carolina will become yet another state to remove federal unemployment benefits from the table. The state will gradually take away a portion of its federally-funded unemployment benefits to bring back workforce supply in the market. The South Carolina government is noting that labor shortages are affecting economic recovery and while demand for labor is coming back online, the supply of labor remains stagnant.
South Carolina is not the first state to move to suspend federal unemployment benefits. It will follow Montana, another state that noted its resolve to gradually remove the additional federally funded unemployment benefits from the equation. The state has similar reasoning in that gradually removing supplement unemployment payments will help to spur back labor activity. The federally funded benefits, in addition to state unemployment benefits have been known to provide a disincentive to pursuing a job.
While traditional unemployment benefits program provides a lifeline in times of need, the argument has been that supplemental benefits provides a substantial amount of support that can provide minimal returns in the long run.
The next argument is that the state unemployment benefits combined with the federal supplement were supposed to be temporary in nature. Further, it is supposed to offer support for those who genuinely need it and fall under the vulnerable and displaced category. Leaders in these states note that while the short-term financial assistance was supposed to be temporary, it has continued for quite some time. Even more so, the height of the pandemic seems to behind us. As there is more data around the viral disease and its effects, and as economies slowly move to pre-pandemic levels, governments, workers, and general society must adjust to
As benefits continue, it may turn into reckless federal entitlement, providing workers with the idea that it is more beneficial to continue in their new normal instead of returning back to work.
Montana and South Carolina Will Remove Additional Federal Unemployment Benefits by the End of June 2021
South Carolina will start to phase out the unemployment benefit supplement by June 30th. That means that those residents in South Carolina will start to lose the additional weekly federal supplement. At the same time, they can obtain their state benefits as they search for employment.
This policy will apply to everyone from those who participate in the gig economy to contractors and employees. That means that those who are participating in the Pandemic Unemployment Assistance program will not have access to these resources after that date.
Montana is in the process of removing those supplemental options a few days earlier, by June 27th.
The move by the two states shows that this state-oriented tapering of benefits can turn into a trend. A few experts argue that this is a terrible policy decision but addressing supply and demand in the labor market sooner provides more value to each participant.
More restaurants, service industry providers, and other sectors continue to post help wanted and now hiring signs, but labor still has yet to respond in many areas. This shortage has led employers like Mcdonald’s in some locations to offer cash incentives merely to show up for an interview.
The job supply continues to rise. South Carolinians can connect to various jobs, enabling small business owners, gig workers, and contractors to find employment and earn a living. The idea that those in South Carolina and Montana will suffer due to this gradual removal is far fetched in a time where experts expect the national economy to boom. Based on Google Search trends, job searches in South Carolina are now trending up.
The unemployment rate in South Carolina is now below the national unemployment rate of 6.1%. All data points to the fact that the state is back to more thriving economic numbers and in a state of recovery.