Among the bills still moving through session is one that seeks to extend boosted federal unemployment benefits to Alaskans through September. That bill would have also extended a $51-per-dependent increase through March 2022. At least it did until Monday afternoon.
House Republicans approved an amendment during the House Finance Committee’s Monday hearing on House Bill 151 that pulls the boosted help for unemployed people with dependents six months earlier, arguing that it’s hurting businesses’ ability to hire lower-wage workers. Under the change, the $75-per-dependant aid, which was approved by the Legislature last year, would drop to $24 on Sept. 6 at the same time the federal increase expires.
Rep. Sara Rasmussen, an Anchorage Republican who doesn’t caucus with either the minority or majority, sponsored the amendment and said it was based on the input of many businesses in her district that say they’ve had trouble hiring because unemployment is overly generous.
“My concern is if we go through the holiday season, it makes it even more difficult for people to find employees and I know that is a very, very busy time for the retail/hospitality industry, specifically in November and December,” she said. “And I want to make sure that we have something in place for the people who are struggling, but I also don’t want to impact those industries or job positions who are in that $15-, $20-hour range and make it too difficult for small businesses to keep their doors open due to lack of personnel during the holidays.”
Alaska has one of the lowest unemployment benefit rates in the country in terms of wage replacement with a maximum weekly rate of $370 (about $202 per week for people who were working full-time at minimum wage). The federally funded $300-per-week boost brought the unemployment benefits for someone who had been working at full-time minimum wage from 50% of wage replacement to 125%. The boosted rate for two dependents brings that to 162%, and without either, it’ll fall to 62%.
The change is stark for people earning the state’s median income of $77,640. A person with two dependents would go from 55% wage replacement under the current situation to 28% after losing the both the federal boost and the dependent boost. The state estimated continuing the $75 benefit through March 2022 would cost about $21.1 million from the Unemployment Insurance Trust Fund.
Rep. Adam Wool, D-Fairbanks, suggested cutting the difference and setting the expiration date for the per-dependent boost in December. He recognized that the unemployment may be a barrier to hiring but argued that Sept. 6 is already set to be a significant drop off with the expiration of the federal boost and continuing the increased benefits for dependents would help soften the blow.
“I think they’re going to want, at that point, to find a job as much as anyone else, but if they can’t and they have kids at home, this would give them an additional $50 above what the state number is right now per child. I don’t think that’s a lot of money,” he said, later adding, “I understand the disincentive to go back to work if someone’s receiving too much, but I think after Sept. 6 we won’t be in the receiving too much area. There may be people who abuse the system, but I think there’s a lot of people that don’t, who are looking for work, that can’t find work, who have kids at home.”
Rasmussen said Sept. 6 was the compromise.
“I’ve had pretty extensive conversations with the small businesses in my community on this and people are pretty adamantly against it. I feel like the Sept. 6 date is a very fair compromise already,” she said. “Coming to the middle from where people would like it to not pass at all.”
Wool’s attempt to cut the difference on the expiration of the benefits failed along political lines.
In debate on the underlying amendment, Rep. Dan Ortiz, I-Ketchikan, said that they’re relying on anecdotal evidence from just one area of the state. He said it was unfair to apply what’s going on in South Anchorage to the rest of Alaska.
“It’s only anecdotal evidence and the broad range of information that’s out indicates that there are large sections of our state that could really use this unemployment benefit,” he said. “While I recognize there may be certain businesses in certain areas that see themselves as perhaps being negatively impacted by an extension of these benefits, I think that based on the testimony we’ve heard is a broader range of people really do need these resources and will need these resources.”
Others said they would do what they could to help single parents through the recovery of the pandemic.
Rep. Ben Carpenter, R-Kenai, supported pulling back the benefit earlier, arguing that it’ll help the state get back to normal faster.
“We’re not eliminating help,” he said, “we’re reducing it.”
As for the impact on unemployed parents, Rasmussen said there’s other help available to them.
“A single mom who is not working would qualify for state assistance for many things, including rent, daycare and food,” she said.
The amendment passed on a 6-5 vote along party lines.
Republican Reps. Rasmussen, Carpenter, DeLena Johnson, Bart LeBon, Steve Thompson and Kelly Merrick voted in favor of the measure. Independent and Democratic Reps. Wool, Ortiz, Bryce Edgmon, Neal Foster and Andy Josephson opposed the change.
Following the vote, the legislation was discharged from committee and now heads to the House floor for consideration.
Why it matters: The claim that boosted unemployment is hurting employers has been a favored line among Republicans, but the picture isn’t quite so clear. While the unemployment is certainly a factor, researchers suggest it’s had a lower-than-expected impact on people’s willingness to work than expected, according to a report by the New York Times. What are also likely factors are that people don’t want to work in potentially high-risk service industry jobs, that people are still needed at home and that people have grown dissatisfied with low-paying service industry jobs when grocery stores and big box stores are paying more:
The simple, Economics 101 answer to what a company should do when it has trouble recruiting enough workers is to pay them more. That is the logic that underpins the economic policy of the Biden administration and the Federal Reserve: Achieving a tight labor market will result in higher pay for workers.
But the restaurant industry faces a particular challenge. The sectors that have thrived during the pandemic have been on hiring binges, often paying higher wages than restaurants do. Amazon alone added 500,000 employees in 2020, with a wage floor of $15 an hour. Companies like Walmart, Target and home-improvement and grocery chains have all been hiring aggressively with wages at or not far behind those levels.