Dunleavy administration to ax boosted unemployment as GOP blames it for shortage of low-wage labor

The $300 weekly boost the federal government has given to people on unemployment is set to run through September, but thanks to action from the Dunleavy administration it is now set to end next month.

Department of Labor Commissioner Tamika Ledbetter announced today that the state will ax the federally funded portion of the unemployment benefit on June 12, 2021. It had been set to run through Sept. 6 of this year and was funded by the federal government.

“As Alaska’s economy opens up, employers are posting a wide range of job opportunities and workers are needed,” she said in a prepared statement.

Unemployment benefits and their impact on the labor market has gained attention in recent weeks as conservatives have blamed the benefit as a disincentive to work in minimum-wage or near-minimum wage jobs. Economists have warned that the situation is not nearly so simple, noting that the labor shortages are due to a multitude of factors including considerations for personal health and the ongoing shortage of child care (a system that largely relies on low-wage workers) as well as the fact that the simultaneous efforts to rehire low-wage workers has driven up demand.

Republican lawmakers on the House Finance Committee voted earlier this month to also end a per-child boost to unemployment six months earlier than originally planned. The $51 boost was originally set to expire in March 2022, but they voted to move it to Sept. 6 in line with what would have been at the time the end of federal boost. Despite pushback from the committee’s Democrats and independents who warned that they were relying on anecdotal data from a few employers, Anchorage Republican Rep. Sara Rasmussen was adamant that ending it six months early is the compromise when many employers didn’t want to see any continued boosts.

“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.”

And with the Dunleavy administration’s actions, it looks like Rasmussen’s business constituents are going to get their way.

For many progressives, the push to undercut unemployment benefits at the behest of low-wage employers has renewed discussions about equity in labor. In a floor speech following the action on the House Finance Committee, Anchorage Democratic Rep. Chris Tuck talked about the history of the labor fight in the United States, about how such low wages are designed to trap people in undesirable jobs and about the overall economic benefit of treating employees with dignity through a living wage.

“When we look at those people who are unemployed and look at others that are trying to hire, I guess the real question is: Are they paying a living wage? Nobody wants to be on unemployment,” he said. “You look at minimum wage, there’s no opportunity in that. You’re basically making people a slave to their workplace when all they’re trying to do is to work to exist.” 

Alaska isn’t the first state to opt to end boosted unemployment as a response to the labor shortage, but some others have sought to incentivize the return to work. Earlier this month, Montana opted to end its benefits but announced a Return-to-Work program to pay employees a bonus for returning to work from employment and holding down the job for at least a month.

In Alaska, there’s been no such movement toward a bonus effort. Instead, Ledbetter pointed to the state’s virtual job far (a frankly baffling to use system), noting that “More than 50 local employers have posted recruitments, and the response has been very positive.”