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Citing ‘labor shortage’, Montana to stop federal unemployment benefits

Montana will cut federal unemployment benefits nearly three months earlier and offer “back-to-work bonuses” as a favor to employers, Governor Greg Gianforte (right) announced Tuesday.

Gianforte said he is hearing from “too many employers across our state who cannot find workers” and added that the state suffers from a “labor shortage” made worse by the benefits.

Starting June 27, workers in Montana will lose the additional $ 300 per week the federal government has been paying since December. The state will also cancel federal benefits for on-demand workers and the long-term unemployed.

Montana is the only state to say it will forgo federal benefits, which are expected to expire in September, although Congress may be able to extend them again. It is also possible that other states will follow Montana’s lead.

With Montana’s unemployment rate of 3.8%, up from 6% nationally, “the vast expansion of federal unemployment benefits is now doing more harm than good,” Gianforte said.

Across the country, employers and Republicans are complaining about a labor shortage, even though the unemployment rate remains high and wage growth has not picked up. Economists say if workers are really hard to find, the shortage should translate into higher wages.

Gianforte said he would use American Rescue Plan funds to pay a “back-to-work bonus” to people moving from unemployment to employment. The state said workers receiving unemployment benefits starting this week would be eligible for a payment of $ 1,200 if they accept a job and remain employed for at least four weeks.

Republicans have offered work bonuses as an alternative to unemployment benefits since last year. The American Rescue Plan does not explicitly give states the power to create such a program, but it does create a $ 219 billion fund that states can use to respond to the health and economic effects of the pandemic. Republicans have called the provision a “blue state bailout.”

The Montana Department of Labor and Industry cited reports of local staffing issues, including one about a pastry shop that could not fill positions offering $ 10.50 an hour.

But companies around the world are complaining about the difficulty in finding workers, whether or not the federal government pays additional benefits. Montana businesses complained of labor shortages in 2019 when no federal benefits were in place, as did the state Department of Labor and Industry in its 2019 report on Labor Day.

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