The U.S. Chamber of Commerce is calling on Congress to cancel the extra $300 in weekly unemployment benefits, citing worker shortages. 

"The disappointing jobs report makes it clear that paying people not to work is dampening what should be a stronger jobs market," U.S. Chamber of Commerce Chief Policy Officer Neil Bradley said in a statement on Friday. "One step policymakers should take now is ending the $300 weekly supplemental unemployment benefit. Based on the Chamber’s analysis, the $300 benefit results in approximately one in four recipients taking home more in unemployment than they earned working."

The U.S. economy added much fewer jobs than expected in April, with employers increasing their payrolls by 266,000 jobs, well below the 1 million that economists expected, according to consensus data compiled by Bloomberg. The economy is still 8.2 million jobs short of its February 2020 pre-pandemic levels.

The Chamber's support for canceling benefits comes after South Carolina and Montana announced plans this week to eliminate their federal jobless benefits starting next month.

"This labor shortage is being created in large part by the supplemental unemployment payments that the federal government provides claimants on top of their state unemployment benefits," Gov. Henry McMaster said in a statement on Thursday. "What was intended to be a short-term financial assistance for the vulnerable and displaced during the height of the pandemic has turned into a dangerous federal entitlement, incentivizing and paying workers to stay at home rather than encouraging them to return to the workplace."

The American Rescue Plan, signed into law in March, extends federal unemployment programs until September 5. But starting June 30, jobless South Carolinians will lose the extra $300 in weekly unemployment benefits, while contractors, gig workers, and others will lose access to the Pandemic Unemployment Assistance (PUA) program, meaning those workers won’t get any support at all.

Montana plans to cancel those same benefits and programs on June 27.

Several papers found that the extra $600 in benefits distributed earlier in the pandemic had limited labor supply effects and likely didn’t disincentivize work, including one by the National Bureau of Economic Research and another by Yale University. The current supplemental benefit is worth half of what those papers reviewed.

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"The 100% federally-paid unemployment benefits have boosted spending and contributed to the strong economic recovery," Andrew Stettner, an unemployment insurance expert and senior fellow at the Century Foundation, previously told Yahoo Money. "It's shortsighted for the state to sacrifice that economic stimulus based on the anecdotal labor shortages concerns of a few employers, especially given the limited evidence of work disincentives from unemployment pay during the pandemic."

As a way to incentivize workers to return to work, Montana is offering a one-time return-to-work payment of $1,200, using money from the American Rescue Plan to fund the program. South Carolina hasn't announced a return-to-work bonus once the federal benefits are cut. The Chamber of Commerce didn't mention that type of incentive in its statement, either.

Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova

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