As unemployment claims fall, more Republicans push to curtail benefits.

The labor market is struggling to return to normal after more than a year of being whipsawed by the pandemic.

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As unemployment claims fall, more Republicans push to curtail benefits.

Servers at a restaurant in Columbia, Mo., last week. The labor market is struggling to return to normal after more than a year of being whipsawed by the pandemic.Credit…Jacob Moscovitch for The New York Times

May 13, 2021, 6:40 a.m. ET

With new claims for unemployment benefits inching down, a growing number of Republican governors around the country have announced they are withdrawing from an array of federal pandemic-related jobless benefits.

About 487,000 workers filed first-time claims for state benefits during the week that ended May 8, the Labor Department said on Thursday, a decrease from 514,000 the week before. In addition, about 104,000 new claims were filed for Pandemic Unemployment Assistance, a federal program covering freelancers, part-timers and others who do not routinely qualify for state benefits. Those figures are not seasonally adjusted.

After more than a year of being whipsawed by the pandemic, the economy has been showing new life. Restrictions are lifting, businesses are reopening and job listings are on the upswing. But hiring in April was weaker than expected.

“Over all, jobless claims are about three times as high as they were pre-Covid, but they’re coming down” said Heidi Shierholz, senior economist at the left-leaning Economic Policy Institute.

The labor market’s slow recovery from the staggering losses wreaked by the pandemic is breeding frustration and uncertainty.

Some employers, particularly in the restaurant and hospitality sectors, have complained of having trouble finding workers. The U.S. Chamber of Commerce and many Republicans have argued that a temporary $300-a-week federal unemployment supplement has made workers reluctant to return to the job.

As of Thursday, Republican governors in 14 states had announced that they planned to terminate a network of federal pandemic-related unemployment benefits ahead of the Sept. 6 expiration date.

The list includes: Alabama, Arkansas, Georgia, Idaho, Iowa, Mississippi, Missouri, Montana, North Dakota, South Carolina, South Dakota, Tennessee, Utah and Wyoming.

“With the nation’s lowest unemployment rate at 2.9 percent and plenty of good paying jobs available today, it makes sense to transition away from these extra benefits that were never intended to be permanent,” Gov. Spencer J. Cox of Utah said Wednesday.

In most cases, withdrawal would mean an end not only to the weekly supplements, but also to Pandemic Unemployment Assistance and to extended benefits for those who have exhausted other state and federal jobless insurance.

Economists are skeptical that supplemental jobless benefits are playing anything more than a bit part in the pace of the job market’s recovery.

“There is tremendous churn in this labor market,” said Gregory Daco, chief U.S. economist at Oxford Economics. “There are still major supply constraints and unemployment benefits are not the most important one. The virus is.”

Many workers have children at home who are not attending school in person. Others are wary of returning to jobs that require face-to-face encounters. Covid-19 infections have decreased since September, but there are still 38,000 new cases being reported each day and 600 Covid-related deaths. Less than half the population is fully vaccinated.

There is halting progress from employers as well, as businesses continually update their assessment of costs and customer demand. “The hiring pattern isn’t going to be smooth,” Mr. Daco said. “Businesses hire and then reassess. They need to find the right balance, it’s a trial-and-error process more than anything.”

Prematurely halting federal jobless benefits is “detrimental to the economy,” Mr. Daco said. “You’re voluntarily hurting certain vulnerable tranches of the population.”

Mississippi, Tennessee and Alabama are among the states that offer the lowest maximum benefit to qualified individuals — $275 or less each week. Nationwide, the average weekly benefit without federal supplements is $387, according to the Center for Budget and Policy Priorities.

There are 8.2 million fewer jobs than in February 2020, and last month, the unemployment rate was 6.1 percent. Of the states that have announced they are pulling out of the pandemic jobless programs, only Mississippi has a rate than is higher than the national average. It was 6.3 percent in March, the latest month for which it is available.

Brillian Bao, Laney Pope, John Yoon and Alex Lemonides contributed reporting.

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