As GOP-run states slash jobless aid, the Biden administration finds it has few options

WASHINGTON - The Biden administration has scrambled to devise a way to keep paying heightened unemployment benefits to an estimated 3.6 million Americans who stand to lose them soon in Republican-led states, but Labor Department officials have come to believe that the law does not allow them to do so.

With a federal intervention now unlikely, jobless Americans in at least 22 states including Arizona, Ohio and Texas are set to see their payments fall by $300 each week - or be wiped out entirely - as GOP governors try to force people back to work in response to a potential national labor shortage.

The trouble centers on a series of federal coronavirus stimulus programs, some of which date back to the earliest days of the pandemic. Congress over the past year has added $300 to every out-of-work American’s typical weekly unemployment check, extended the number of weeks they are eligible for aid, and offered benefits to those who are self-employed, including self-employed and gig-economy laborers, who otherwise aren’t able to collect jobless support.

Federal lawmakers never required states to offer any of these programs - so Republican governors in recent days have announced plans to roll back their participation in an attempt to jolt their local economies. Some Americans are now set to see steep reductions in their payments starting in June, as they are left to collect only as much as their states allowed before the pandemic, which in some places falls below poverty-level wages. Millions more will lose all of their unemployment aid, since states generally did not pay benefits to gig-economy workers before last year.

For Sandra Fry, a self-employed travel agent in Mountain View, Ark., the benefits are set to dry up next month. Last year, the 68-year-old enrolled in an unemployment stimulus program because the pandemic led many Americans to stop traveling - though she’s still had to process all of their cancellations without pay in the meantime.

“I’m still talking to customers, I’m still chasing down refunds, I’m still doing my work - I’m just not getting any money for it,” she said. “I’ve worked probably harder this year than I ever have.”

The looming cuts have troubled the Biden administration and its Democratic allies, which say any shortage in workers is the result of Americans’ lingering concerns about their safety, refusal to accept low wages or inability to leave home as a result of inadequate child care. But federal officials have come to believe that they may be powerless to stop Republican governors from acting, according to two people briefed on the matter who spoke on the condition of anonymity to describe private deliberations.

The Labor Department generally can’t force GOP leaders to pay the federal stimulus benefits under a national unemployment system that gives states broad latitude to implement their own systems as they see fit, the sources said. Nor can federal agencies circumvent Republicans by administering unemployment checks on their own or through cooperating agencies in other states, according to those familiar with its thinking. Even if the Labor Department had the authority, the agency probably would face significant legal, logistical and technological hurdles in distributing the aid swiftly - a complex task involving a web of technology and personnel that has flummoxed many state agencies despite decades of experience.

The Labor Department’s analysis probably will disappoint lawmakers including Sens. Ron Wyden, D-Ore., and Bernie Sanders, I-Vt., who over the past week have called on the Biden administration to ensure those who are out of work don’t face further financial hardship. Labor advocates similarly had pushed the federal government to take action, stressing that it has the legal obligation and ability to continue administering some of the benefits because of the wording in the stimulus law, known as the Cares Act, that authorized some of them.

Instead, federal officials believe that any solution must come from Congress, where Republicans this month have introduced ill-fated legislation to cancel the expanded unemployment benefits nationally. The political obstacles for now mean there is perhaps no recourse for the approximately 3.6 million Americans nationwide who stand to see their checks slashed this summer, according to a Washington Post analysis of recent claims data.

The financial burden could fall hardest on about 2.7 million workers who are at risk of seeing their benefits eliminated entirely, the data shows. That includes Americans who have been out of work for so long that they have exhausted state allocations as well as those who are self-employed and participating in a program known as Pandemic Unemployment Assistance, or PUA.

The numbers are likely to change in the coming weeks, as new applicants apply for benefits and existing recipients find new work. Roughly 444,000 Americans filed initial claims for unemployment insurance last week, the Labor Department reported Thursday. The figure marked the lowest level of filings since March 14, 2020, prompting White House officials to herald the country’s swift recovery from one of the worst crises since the Great Depression.

But the rebound hasn’t always been smooth: The economy in April added far fewer jobs than expected, prompting Republican lawmakers and business leaders raise alarms about an emerging worker shortage. Organizations U.S. Chamber of Commerce contend that high unemployment payments are largely to blame, as Americans choose to collect benefits rather than apply for a growing number of open positions. In response, they have called on Congress to roll back the benefits before they are set to expire in early September.

The White House, for its part, maintains that the unemployment stimulus aid has not contributed to a crunch in hiring. Recent economic data appears to support the Biden administration’s position: If seven of 28 unemployed individuals received job offers they would normally accept, one of them may choose to turn it down because of the additional $300 in weekly unemployment payments authorized under the stimulus, according to a new analysis of from the Federal Reserve Bank of San Francisco. The paper said it could result in a “small but likely noticeable” affect on both workers’ behavior - and “employers’ perception of worker availability” - in early 2021.

For unemployed workers such as Fry of Arkansas, it’s a difficult period. A self-described independent voter, she said she was hoping that Sanders or the federal government would find a way around the GOP moves to cut federal aid. She said the cuts would make life needlessly difficult for Americans like her and do little to get her work up and running again.

She and her husband draw modest Social Security checks, but they have been relying on the weekly unemployment payment to help pay their bills, including $800 a month for health insurance and prescriptions, in addition to car insurance, home insurance and property taxes, among other expenses.

She’s kept her eyes open for other work, but said she has not seen anything suitable where she lives in rural northern Arkansas, other than a part-time job 30 miles away and a bunch of fast-food positions that paid less than $15 an hour.

She says she and her husband will need to pare down her expenses after the funding is cut off.

“At our age, you hate to lose everything you’ve worked for all these years,” she said. “This was supposed to be the good time of your life and now you’re worried about you’re going to have to spend my money on this or that.”