Iowa to stop issuing federal unemployment benefits next month

Iowa will stop offering on June 12 the additional unemployment benefits approved by Congress as part of pandemic relief efforts, Gov. Kim Reynolds announced Tuesday.

Starting then, Iowans will no longer be able to receive Federal Pandemic Unemployment Compensation, Pandemic Unemployment Assistance, Pandemic Emergency Unemployment Compensation or Mixed Earners Unemployment Compensation. The programs do not expire nationally until Sept. 4.

“Federal pandemic-related unemployment benefit programs initially provided displaced Iowans with crucial assistance when the pandemic began,” Reynolds said in a statement. “But now that our businesses and schools have reopened, these payments are discouraging people from returning to work.”

Those programs made up more than 80 percent of unemployment benefits paid in the week ending May 1 in Iowa. State unemployment benefits will remain in place.

Forbes ranked Iowa as the seventh-best state for unemployment benefits in March, weighing factors such as average payments, length of time and cost of living. The minimum weekly payment for an unemployed Iowan without any dependents is $73 under the state program.

Iowa Senate Minority Leader Zach Wahls, D-Coralville, said the benefits Reynolds is ending early are “helping Iowans stay housed, clothed and fed.”

“It makes no sense for Gov. Reynolds to pull the rug out from unemployed Iowans while we remain in the grip of a worldwide pandemic,” Wahls said in a statement.

Iowa House Minority Leader Todd Prichard, D-Charles City, called Reynolds’ decision “unconscionable and heartless.”

“In search of national headlines, Gov. Reynolds has thrown common sense out the window and again failed the leadership test,” Prichard said in a statement. “Gov. Reynolds needs to advocate for Iowans instead of using vulnerable Iowans as a steppingstone for her own political gain.”

U.S. Rep. Cindy Axne, the lone Democrat in Iowa’s congressional delegation, said in a statement she shares Reynolds' goal of "getting Iowans back to work and our businesses back to full strength" but disagrees with how Reynolds is doing it.

"Cutting the safety net out from underneath Iowans who are still out of work and looking for a job is no way to do it," Axne said.

"Slashing their benefits only sends the message that Iowa isn't on the side of its workers and their families."

Charlie Wishman, president of Iowa Federation of Labor, AFL-CIO, also said cutting unemployment "isn't the answer" for Iowa's long-term workforce shortage.

"Iowa needs to change its course economically, take steps to raise wages and benefits, make Iowa a good place to raise a family and actually invest in our education instead of defunding it," Wishman said in a statement.

Some Democrats have pointed to a study by the Federal Reserve Bank of Chicago saying those who receive unemployment payments search more intensely for work.

The study, however, said those who do not receive benefits are more likely to accept a job that pays “considerably less” than their previous job.

The Iowa Association of Business and Industry, which represents about 1,500 employers in the state, lauded Reynolds’ decision.

“Iowa had a workforce shortage prior to the pandemic,” Iowa ABI President Mike Ralston said in a statement. “The continued extended benefits have only exacerbated the challenge and slowed our recovery.”

The Cedar Rapids Metro Economic Alliance is among the business groups in support of Reynolds’ decision.

“As businesses struggle finding employees to return to work and fill open jobs throughout Iowa, we support terminating Iowa’s participation in the federal weekly supplemental unemployment benefits,” Economic Alliance spokeswoman Melissa McCarville said.

“We must take steps that help our businesses grow and get more employees back to receiving their retirement, health care and other employment benefits.”

A Gazette analysis of information from Iowa Workforce Development shows someone without any dependents would need to earn under $9.33 an hour to earn less working than in collecting unemployment benefits.

Dustin Miller, the executive director of Iowa Chamber Alliance, issued a statement neither supporting or opposing Reynolds’ decision, instead focusing on the workers who have left the workforce and not filed for unemployment aid.

“Iowa’s pre-pandemic workforce issues have been exacerbated with many individuals choosing to leave the labor force entirely,” Miller said.

“Iowa’s economy needs people to safely and responsibly get back to work to continue our economic recovery.”

Iowa is among the states to have more job openings than job seekers. IWD Director Beth Townsend said the agency’s IowaWORKS site has more than 66,000 job openings.

The state had only 31,826 unemployment claims in the week ending May 1, according to preliminary data released last week.

“The overwhelming message we receive from employers these days is the lack of workforce that is adversely affecting their ability to recover from the pandemic,” Townsend said in a statement.

Iowa is not alone in cutting federal unemployment benefits. Several other Republican-led states, including Arkansas, Alabama, Mississippi, Montana and South Carolina, have taken similar actions.

Tuesday’s decision adds to the ongoing tensions between Reynolds and the Biden administration.

In a Fox News Channel appearance with four other Republican governors last month, Reynolds announced Iowa turned down $95 million in federal aid for COVID-19 testing in schools.

She also directed Attorney General Tom Miller to join 12 other states in a lawsuit against the Biden administration over a provision prohibiting states from using federal aid to offset tax cuts.