Is Federal Aid Causing Labor Shortage? Montana Thinks So

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That’s how many fewer weeks unemployed residents in Montana can receive federal pandemic benefits—including an extra $300 a week—after the governor there cut them off early, saying the programs were doing more harm than good.

The $300 federal supplement to regular state-administered unemployment benefits, authorized by the American Rescue Plan through Sept. 6, will now end for Montana residents on June 27, Montana Governor Greg Gianforte announced Tuesday. The state will also withdraw 10 weeks early from a federal program that extended the length of time unemployed workers could claim benefits, and another that allowed independent contractors and gig workers to collect benefits. 

Gianforte’s move, meant to encourage people to get back into the workforce, highlights an ongoing debate about whether the government programs make it appealing to be unemployed, acting as a disincentive to seeking work. (Some academic studies have found it’s not.) There is a labor shortage in Montana, the governor said, and the state’s unemployment rate has dropped back down to 3.8%, near pre-pandemic lows. 

“Montana is open for business again, but I hear from too many employers throughout our state who can’t find workers,” Gianforte said in a statement. “Incentives matter,” he continued, “and the vast expansion of federal unemployment benefits is now doing more harm than good. We need to incentivize Montanans to reenter the workforce.”

To that end, Gianforte said unemployment beneficiaries in Montana who find a job and work at least four weeks will receive a $1,200 return-to-work bonus.

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