The decision to cut $300 federal unemployment benefits in GOP states is 'tied to politics, not economics,' JPMorgan says

• A JPMorgan note said that politics — not economics — is driving states to end federal unemployment early.
• So far, 24 states have opted out of benefits prematurely. They’re all governed by Republicans.
• For unemployed workers, that means continued benefits are left to the politics of their governors.
• See more stories on Insider’s business page.

The move to cut federal unemployment benefits in red states is “tied to politics, not economics,” according to a Tuesday note by the economic research team at JPMorgan. 

The note refers to two dozen GOP-run states deciding to end their federal unemployment benefits early, leaving 4 million workers set to lose an extra $300 per week months before the law dictates.

The team said the programs are likely contributing to the limited amount of workers currently searching for new jobs. But it noted that neither unemployment rates, earnings growth, nor participation levels are driving states to halt jobless aid early. “It therefore looks like politics, rather than economics, is driving early decisions to end these programs,” they wrote.

JPMorgan pointed out that many GOP states did not have more job openings than jobless people, which economists call a tight labor market.

According to estimates from Andrew Stettner of the left-leaning Century Foundation, 2.1 million workers will lose benefits completely. That’s because they’re on Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC), two federal programs that expand who’s eligible for unemployment and how long recipients can access benefits for.

Governors in those states have cited the increased benefits as disincentivizing a return to work, and have framed the cuts as a way to kickstart the economy and get workers back. But that’s leaving some workers in a precarious situation, as Insider reported; benefits will halt for many in a matter of weeks. 

It also means that unemployed workers in different states will suddenly receive wildly differing amounts of money. States already had differing levels of basic unemployment benefits, and the federal benefits served to standardize those levels. 

Now, however, workers in blue states — and the GOP-led states that haven’t opted to end their benefits early — will receive more than their peers simply by virtue of whomever their governor is.

Scott Heide, 35, is an unemployed worker in Florida, which has opted to only cut off the additional $300 in weekly benefits, not all federal programs. Even so, the move will drastically impact his ability to pay bills.

“I’m living in a Republican-controlled state,” Heide told Insider. He added: “If I was living in a Democratic controlled state, they don’t have that issue. We’re facing the consequences because of that.”

Are you unemployed and have a story you want to share? Contact these reporters at [email protected] and [email protected].

Get the latest JPM stock price here.

Source: Read Full Article