Biden government cannot stop government withdrawals from unemployment programs, labor officer says

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The Department of Labor found that it cannot legally prevent states from withdrawing from the pandemic-era unemployment programs that are helping millions of Americans, according to an agency official.

The employment office also cannot ensure that federal unemployment benefits flow to affected people through an alternative mechanism, the official said.

“We do not have the legal authority,” said the official, who spoke on condition of anonymity.

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25 states announced their intention to prematurely withdraw from federal programs that have offered income support to unemployed people since the early days of the Covid pandemic.

The withdrawal will affect approximately 4 million people – about 25% of all Americans who receive benefits.

The states, all of which are run by Republican governors, are ending a weekly $ 300 supplement to state benefits. Most also hire assistance to the long-term unemployed and self-employed, gig and other workers who are normally not eligible for government assistance.

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Four states – Alaska, Iowa, Mississippi and Missouri – are leaving the programs on Saturday. The rest do this until July 10th. The help should last until Labor Day.

The states claim that improved performance creates a labor shortage and provides an incentive to stay home instead of work. Critics of the move say the benefits don’t add much to labor supply issues; They think that temporary pandemic factors like persistent health risks and child care responsibilities are more to blame.

Intervention by the Ministry of Labor

Senator Bernie Sanders, I-Vt., And the National Employment Law Project, an employee advocacy group, last month called on US Secretary of Labor Marty Walsh to intervene on behalf of the affected workers.

They argued that Walsh had legal authority to prevent loss of benefits for a subset of individuals – self-employed, gig and other workers collecting pandemic unemployment benefits – based on the wording in the CARES law that created the program . (It seems that the same flexibility wouldn’t apply to other programs.)

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Such an intervention would, according to an estimate by Daniel Zhao, a senior economist at Glassdoor, a job and recruiting site, ensure that aid can flow to about 1.6 million people.

States had two options: The Biden government could ask the states to continue paying PUA benefits, or instead let other states manage the funds, according to the National Employment Law Project letter.

The Department of Labor reviewed the letters, but ultimately found that legal and practical problems preclude intervention.

“I think it’s a legal gray area,” said Andrew Stettner, a senior fellow at The Century Foundation, a progressive think tank. “But [the Labor Department’s] Position is an understandable position that you can take.

“We think there are arguments if you want to expand the law,” he added. “But they don’t choose to stretch the law that way.”

The White House has not returned a request for comment. A spokesman for Sanders also did not respond to inquiries.

“We remain confident that this gruesome move by 25 Republican governors to prematurely end vital pandemic aid is in violation of CARES, and we are extremely disappointed with the US DOL’s decision not to enforce the law,” said Nicole Marquez, director of social security for the National Labor Law Project, in an email.

The organization hopes to continue working with the Department of Labor to help these workers through the ongoing crisis, Marquez added.

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The federal government sets minimum standards for state unemployment systems. It enforces these rules through a tax system – corporations would pay higher taxes in states that do not comply with federal regulations.

(Companies would pay a federal tax of 6% instead of 0.6% on the first $ 7,000 of worker wages – or $ 420 per worker instead of $ 42.)

But there is no such punitive or enforcement mechanism in place in relation to the pandemic-era PUA program, the labor officer said.

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The Department of Labor could choose to withhold administrative funds from states exiting federal programs, but doing so would likely harm workers who continue to seek and receive assistance, the official said.

From a practical point of view, the Department of Labor would not know who to pay even if other states managed the benefits instead, the labor officer said. That’s because the office doesn’t get any identifying information about beneficiaries from states, which means the agency would have to try to force states to share that data.

It would be difficult to require PUA recipients to reapply for benefits to circumvent the data problem, said Stettner.

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