Starting this week, Ohioans without a job won't get $300 extra in unemployment benefits after Gov. Mike DeWine announced last month he would opt out of enhanced federal pandemic benefits designed to prop up the COVID-19-battered economy.
The extra money was cut off after Saturday. The Ohio Department of Job and Family Services, which handles unemployment, said it would continue to pay the money on all eligible claims for weeks up to and including June 26, but not after.
The reason? Many business groups and Republican leaders fear the ongoing rebound could choke on a mounting labor shortage. They believe legions of workers benched by the new coronavirus are choosing to stay home on their fatter unemployment checks. The additional $300 nearly doubles the average weekly jobless benefit paid in Ohio.
Ohio's solution follows the lead of other Republican-led states that hope to incentivize workers back on the job by cutting off the extra money.
Will the plan work? Economists say there's no data to say one way or the other.
Ohio's 5.0% unemployment rate with nearly 278,000 jobless workers roughly matches pre-pandemic levels. Ohio's initial jobless claims at 16,300 in the first week of June are down sharply from COVID-19 highs but still double what they were just before the pandemic.
Whether Ohio moves the needle further on its jobs recovery will likely show up first in those data points.
Half of U.S. states have ended participation in enhanced unemployment benefits, starting in mid- to late June. Even for the four states that dropped the benefits the earliest on June 12 – Alaska, Iowa, Mississippi and Missouri – there's minimal data.
"There has to be some level of welfare that keeps people at home – but we don't know what it is," said Gary Clayton, chair of the Economics and Finance Department at Northern Kentucky University.
Business groups, such as restaurants, believe many potential workers have little incentive to return to kitchens as long as they get enhanced unemployment.
Critics have called the move "cruel" and say it will slow overall consumer spending in Ohio. If restaurants and other businesses need more workers, they should pay better, they say.
"By cutting off these benefits to unemployed Ohioans DeWine is not only dealing a cruel blow to families, he will hurt Ohio’s economy by depriving businesses of nearly $1 billion in spending that won’t happen now," Zach Schiller, research director at Policy Matters Ohio, said in a statement.
But starting wages are already climbing due to worker shortages, which is contributing to inflation fears that could further stall economic recovery.
"As the economy reopens, businesses across the state have struggled to restaff their operations and keep pace with resurgent consumer demand," Logan Kolas, an economic policy analyst with the Economic Research Center at The Buckeye Institute, said in a recent editorial. "Expanded, temporary unemployment insurance being pumped from Washington has made it harder – and more expensive – for companies of all sizes to re-attract workers and reopen their doors."
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