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

Gov. Mike Dunleavy during a September 2020 town hall. (Photo by Governor's Office/Flickr)

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.”

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

  1. Marlin Savage | May 14, 2021 at 12:50 pm | Reply

    Unfortunately, people I know are happy collecting rocking chair unemployment money PLUS the Fed extra $$$ and will not go back to work…… Fishing season!!!!

  2. Marilyn Asicksik | May 14, 2021 at 3:59 pm | Reply

    This is completely unfair to single moms. Or dads. Bad bad idea

  3. Marilyn Asicksik | May 14, 2021 at 3:59 pm | Reply

    This is completely unfair to single moms. Or dads. Bad bad idea

  4. Nicole Hartman | May 14, 2021 at 7:46 pm | Reply

    You just lost my vote. If business paid better maybe they would have employees.
    I’m getting laid off Friday for 3 months. Regular UI doesnt pay enough to put gas in a vehicle and look for work and now your ending the Federal UI. It’s not coming out of Aks pocket. The problem is people are not paid a decent wage. The majority work over and above and are treated terrible and paid nothing. It takes 2-3 jobs to survive. Housing, utilities, insurance, vehicle, food. $15 per hour doesnt come close to covering it.
    Unemployment is not the problem. The pay or lack of is the problem.
    Yes you lost my vote and support. Very disappointed.

  5. turbodigits | May 15, 2021 at 7:44 pm | Reply

    According to ADN’s story about this, 31,842 Alaskans are currently drawing unemployment and will lose the $300 weekly federal boost, which costs the state nothing. Turning this money back to the federal government will pull $9.5 million per week out of our economy (31,842 x $300). You might think that sounds dumb, but Labor Commissioner Ledbetter has reassured us that “the state’s decision to cut benefits was driven by anecdotal information from employers.” Seriously, what choice does the administration have other than to ignore hard data when there’s purely anecdotal evidence?

    On the plus side, the recall movement is only 13,355 signatures away from getting their question on the ballot, so at least someone might benefit from this.

  6. Amazing states are able to opt out of Fed boost but still insist on vaccines to boost immunity and employers right to coerce job applicants by pushing vaccine venom so dirty needle by the vile vile !

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