Montana will soon stop paying federal pandemic unemployment benefits to its residents, opting instead to provide $1,200 return-to-work bonuses.
It is the first state to end participation in the historic federal expansion of jobless benefits, which Congress enacted last spring as the coronavirus pandemic began upending the national economy and costing millions of Americans their jobs.
The move, which may be replicated in other states as the economy springs back to life amid declining coronavirus cases, is necessary to address the state’s “severe worker shortage,” said Gov. Greg Gianforte, a Republican.
He noted that he has heard from many employers that they can’t find workers, particularly in the health care, construction, manufacturing and hospitality and leisure industries.
“Incentives matter and the vast expansion of federal unemployment benefits is now doing more harm than good,” Gianforte said. “We need to incentivize Montanans to reenter the workforce.”
Business owners and Republican national and state officials have warned over the past year that the enhanced federal unemployment benefits will keep out-of-work Americans on the sidelines longer, though several academic studies have found no evidence of that.
Congressional Republicans tried to create a federal return-to-work bonus last summer when lawmakers were debating whether to extend a $600 weekly enhancement before it expired in late July. Neither were ultimately enacted.
After Congress failed to renew the supplement, former President Donald Trump provided $300 in federal benefits for several weeks to the unemployed via executive action. South Dakota Gov. Kristi Noem, a Republican, turned down that offer, saying her state had already recovered most of its job losses.
Federally funded benefits
While all the funding for the pandemic unemployment benefits programs comes from the federal government, states can opt to terminate their participation.
Some 16.2 million Americans were collecting unemployment benefits, as of mid-April, according to the most recent federal data.
Benefits ends in late June
Montana will stop issuing the $300 weekly federal enhancement to jobless residents starting June 27. The benefit, which Congress enacted in late December, was recently extended until early September as part of the Democrats’ $1.9 trillion coronavirus relief package.
The state will also end payments to those in the federal Pandemic Unemployment Assistance and the Pandemic Emergency Unemployment Compensation programs on that date.
The former provides benefits to freelancers, independent contractors, the self employed and certain people affected by the coronavirus, while the latter extends the duration of payments to those in the regular state unemployment benefits program.
Both were created by Congress in March 2020 and were extended to early September as part of the relief package President Joe Biden signed in March.
Also, Montana will reinstate its work search requirement, as of June 27 — a step other states have also taken in recent months.
There were nearly 23,300 unemployment claims filed in Montana the week ending April 24, including residents in the regular state program and the federal programs, according to state data.
Montana’s unemployment rate was 3.8% in March, among the lowest in the nation and near its pre-pandemic lows. It hit a virus-fueled high of 11.9% in April 2020.
There are a record number of new jobs postings each week, said Laurie Esau, the state’s labor and industry commissioner.
“But today, despite an influx of new residents into Montana over the last year, our labor force is some 10,000 workers smaller than it was before the pandemic,” she said.
More than 14,000 jobs are posted on the MontanaWorks.gov portal, according to the state agency.
To provide an extra incentive, those who are receiving unemployment benefits as of May 4 and subsequently accept a job offer will receive a $1,200 bonus after they complete at least four paid weeks of work.
The funding will come from federal money authorized by the Democrats’ relief package, Gianforte said.