Asked for further clarification by a reporter, White House National Economic Council Director Brian Deese declined to say whether the administration believes the benefits are constraining hiring, but also said it is “appropriate” for them to end in September. White House press secretary Jen Psaki also said Friday that Republican governors “have every right” to curb the benefits, a step more than two dozen of them have taken in recent weeks.
Congress last year approved an expansion of unemployment benefits for millions of Americans in the wake of the pandemic, essentially adding hundreds of additional dollars each week in income to people who lost their jobs. The size of these enhanced benefits has contracted a bit, and they are set to fully expire in September. But there is a fierce debate in Washington and around the country now about the impact these benefits are having on decisions about returning to the workforce.
Biden maintained on Friday that the boost in unemployment benefits “helped people who lost their jobs through no fault of their own, and who still may be in the process of getting vaccinated, but it will expire in 90 days. That makes sense — that it will expire in 90 days.”
Asked if the benefits were curbing employment, Psaki told reporters: “I think that’s a really difficult thing to analyze given that we have created a historic number of jobs in the last four months … I would leave it to you and your outside analysts to decide whether that is a big factor in terms of economy and date or whether that is a political discussion we’re having.”
The position marks a nuanced but important change from last month, when the president insisted there was no reason to believe the benefits were discouraging Americans from returning to work. Asked last month if the benefits were discouraging workers from returning to work, Biden said: “No, nothing measurable.”
Cecilia Rouse, chair of the White House Council of Economic Advisers, told Bloomberg News in late May that it was too soon to curb the benefits. Treasury Secretary Janet Yellen said in April that she did not think the benefits were substantially hurting hiring.
“I don’t think that the addition to unemployment compensation is really the factor that’s making a difference,” Yellen said last month.
The White House’s evolving stance comes as the administration faces new pressures to spur an economy that is still roughly 8 million jobs short of where it was before the pandemic. A jobs report released Friday showed the pace of the economy picking up, with roughly 559,000 jobs added in May, while also signaling that jobs are not being added quickly enough.
The administration had already demonstrated some sensitivity to complaints about the unemployment benefits, and Biden officials have never said they play no role in affecting the rate of workers rejoining the labor market. Biden in early May appeared to bend in part to GOP criticisms of the program, saying the White House would seek to “make it clear” that Americans on benefits must take a job if offered one or lose their benefits.
As vaccinations accelerate across the country, about 25 GOP-led states are moving to cancel the supplemental federal unemployment benefits. The cuts are set to kick in as soon as this month and stand to impact as many as 4 million workers. Senate Budget Chair Bernie Sanders (I-Vt.) has said the administration is required by law to pay the benefits to many jobless Americans if their states refuse to do so, but Department of Labor officials told The Washington Post they found little recourse to take such action.
Roughly 15 million Americans are currently receiving some federal unemployment benefits that will end under federal law on Sept. 6. The majority of these jobless workers receive these federal payments on top of base benefits awarded by the state. Roughly 6 million of them receive all of their unemployment benefits through new programs created by the federal government in response to the pandemic. These programs — intended for gig workers and independent contractors shut out of the state unemployment benefits — are also set to expire on Sept. 6. Psaki has said the administration is studying policy options for unemployed benefits for those gig workers. Biden’s comments about benefits expiring were about the supplemental $300 bonus, not the programs for gig workers and contractors.
A White House official disputed that the administration’s position had changed, arguing it has consistently maintained that the benefits were always designed to be temporary and should be tied to broader economic conditions. Psaki has also previously made clear that governors are in charge of their state unemployment allotments.
One person in close communication with the White House said administration officials have become increasingly convinced that unemployment benefits are impacting the jobs market as more data has emerged about the U.S. economy. This person, who spoke on the condition of anonymity to describe private conversations, noted the administration has softened its defenses of the program, given the labor supply issues that have become chief complaints about slow hiring.
Senate Finance Chair Ron Wyden (D-Ore.) said it was clear the unemployment benefits were not slowing the jobs market. “Study after study after study has said jobless benefits are not the driving factor here. There are many issues at play — child care constraints, a lack of public transportation, workers moving, workers switching industries, and workers dropping out of the labor force all together,” Wyden said.
Republicans are adamant that the benefits are hurting the economy, pointing to the comments of Democratic officials such as former Obama administration economic adviser Larry Summers. Rep. Peter Meijer (R-Mich.) said the White House should work with him to retool unemployment benefits into direct cash assistance for parents so they can afford child care support.
“It’s beyond unwise to take an ideological view toward this rather than understanding how folks are reacting to incentives,” Meijer said.