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Biden’s Options Limited on Jobless Aid GOP States Now Reject (1)

May 14, 2021, 2:19 PMUpdated: May 14, 2021, 10:19 PM

More than a million gig workers and long-term unemployed will lose their jobless benefits when at least 16 red states drop out of federal programs in the coming weeks, putting the Biden administration in a bind over what, if anything, it can do to intervene.

The U.S. Labor Department continues to review its options, but the agency’s political leaders acknowledge their hands may be tied—both legally and practically—according to two sources briefed on the matter. Still, the administration faces increasing pressure from Democrats and worker advocates to find a path to keep workers on expanded benefits at least until the pandemic-relief aid programs are set to expire in September.

Among the unemployed losing benefits will be Jervonia and Jesse Melton of Atlanta, who lost their jobs more than a year ago and haven’t been able to find comparable full-time work. She’s working two part-time jobs and overseeing their children’s virtual schooling, while he draws unemployment benefits, drives a little for Uber, and searches for work that pays as well as the meter technician job he had with the City of Atlanta.

Gov. Brian Kemp (R) announced Thursday that Georgia will join more than a dozen Republican-led states opting out early from federal pandemic jobless aid, in response to business community claims that generous benefits are discouraging people from going back to work.

“He makes less on unemployment,” Jervonia Melton said of her husband. “It’s not like we’re getting rich on unemployment. They let him go and they were supposed to call back, but the city has hardly opened back up.”

As the number of Republican-led states opting out early swells, so too do calls from the left for the Labor Department—which oversees the federal-state system—to continue some of the benefits. That includes pressure from Sens. Ron Wyden (D-Ore.), who chairs the Senate Finance Committee, and Bernie Sanders (I-Vt.).

The advocates’ focus is largely on the Pandemic Unemployment Assistance program for gig workers and the self-employed, which they say was set up as a guaranteed federal benefit that doesn’t give states explicit authority to opt out. Sanders went a step further in his Thursday letter to DOL, saying the agency is obligated to add the $300 federal supplement on top of weekly PUA payments.

Besides PUA benefits and the $300 supplement, the states opting out also will stop paying Pandemic Emergency Unemployment Compensation, or PEUC, which provides federal benefits for long-term unemployed people who have used up their maximum number of weeks on state benefits.

Business advocates, including the U.S. Chamber of Commerce, have called for ending the enhanced federal benefits earlier than their scheduled September expiration—particularly the extra $300 per week—and complained that restaurants and other employers are struggling to hire enough workers. The Chamber has estimated one in four unemployment recipients gets more in weekly benefits than they previously earned on their jobs.

“As we emerge from this pandemic, Georgians deserve to get back to normal—and today’s announced economic recovery plan will help more employees and businesses across our state do so,” Kemp said, in unveiling a plan to stop paying federal jobless benefits and roll out resources related to job searches, training, and child care.

Legal, Logistical Challenges

An unresolved and complex legal analysis is underway inside DOL on whether the department would have the authority to force states not to cancel their agreements with the labor secretary that launched their PUA systems in 2020.

Even if the federal agency believed that was legal, a war with GOP governors would carry significant political risk for the administration as it tries to sell more than $2 trillion in infrastructure spending and a massive families-focused legislative package.

Another option under review would involve DOL paying out PUA benefits itself to individuals in those states, but that would bring major operational challenges.

“They don’t have the capacity to do that. They can’t overnight take over administration independently,” said Doug Holmes, a former state unemployment director in Ohio who now lobbies on jobless-aid policy for employers. “Administratively, they’re relying on the states, which is the way it’s been done for 86 years, so it would be difficult to make a change.”

DOL could also collaborate with other states or another federal agency to pay out the PUA benefits to people in non-participating states, said Indivar Dutta-Gupta, co-executive director at the Georgetown Center on Poverty and Inequality.

“It seems clear that DOL has a legal obligation to get pandemic unemployment assistance payments to covered workers as long as the program’s in place, but it will certainly be challenging for DOL to do that without cooperation of the states,” he said.

Even if the department wanted to start processing claims, it would likely still need to retrieve claims data from states that don’t want their citizens to stay on unemployment rolls.

“If a state chose to terminate one or more of the CARES Act UI programs, I’d be skeptical of DOL’s ability to properly administer that program in the absence of that state’s consent,” said John Pallasch, the former Trump-appointed head of the DOL subagency charged with implementing expanded virus-relief benefits last year.

“Without the benefit of state-specific applications, identity verification, monetary determinations, payment or adjudication and appeals staffing and structures, I see significant operational, statutory, and perhaps even constitutional issues,” he added.

Radio Silence

The Biden administration hasn’t taken any public action to pressure the states to keep participating or otherwise continue paying the benefits.

In a statement Thursday, DOL spokesman Egan Reich said, “Secretary Walsh and the Biden Administration have been doing all they can to take concrete action to prevent anyone from falling through the cracks as we know unemployment benefits have served as a vital lifeline for workers throughout the pandemic—to help them buy food, pay rent and remain healthy.”

The department has said it’s reviewing a letter received from the left-leaning National Employment Law Project on Tuesday. That letter advised DOL that it has the authority to either compel states to keep paying PUA benefits or to allow other states to begin administering the program for people in states who pull out.

Vermont’s Sanders echoed the NELP memo’s analysis in his own letter to Labor Secretary Marty Walsh on Thursday.

“As secretary, you are obligated to ensure this aid gets to workers,” the senator wrote. “I urge you to commit to holding states accountable for their role in administering PUA benefits.”

In response to businesses’ concerns, President Joe Biden on May 10 called for states to reinstate work-search requirements and enforce the rule that unemployment recipients can’t refuse an offer of suitable work.

16 States and Counting

Besides Georgia, the governors of Alabama, Arkansas, Idaho, Iowa, Mississippi, Missouri, Montana, North Dakota, Ohio, South Carolina, South Dakota, Utah, and Wyoming have said their states will stop participating in all federal pandemic jobless aid in June, plus Arizona and Tennessee will stop in early July.

Alaska became the latest state on Friday by announcing it would terminate the $300 supplemental weekly payments, starting June 12.

More than 1 million people will lose all benefits in those states, as they would qualify for only federal programs. Jesse Melton, the laid-off City of Atlanta worker, is in that category, since his long-term unemployment outlasted Georgia’s state-level benefits.

People who are currently collecting state unemployment benefits will be able to keep those but will lose the extra $300 weekly, which is a federally funded benefit.

“I’m just one of many stories,” Jervonia Melton said. “Luckily, we were able to put some stuff aside to hang on a little bit, but we’re getting low. I’m scared, I’m really scared now.”

(Updated to reflect that Alaska has ended $300 supplement.)

To contact the reporters on this story: Chris Marr in Atlanta at cmarr@bloomberglaw.com; Ben Penn in Washington at bpenn@bloomberglaw.com

To contact the editor responsible for this story: Andrew Harris at aharris@bloomberglaw.com

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