Alaska to end $300 per week unemployment payments

Construction workers walk down Fifth Avenue between D and E Streets on a February afternoon. (Jeff Chen/Alaska Public Media)

Alaska will join at least 12 other states in opting out of extra federal benefits for unemployed workers, citing workforce shortages.

The withdrawal will end a $300 weekly payment that was added under the Federal Pandemic Unemployment Compensation program passed by Congress last year. It’s paid in addition to regular state unemployment insurance benefits.

Alaska Department of Labor Commissioner Tamika Ledbetter said during a Friday press conference that the state’s economy is showing signs of recovery, and there are employers trying to fill jobs.

“Therefore, it is time for Alaskans who are able and available to go to work to do so,” she said.

Recently, several Republican-led states have opted to withdraw from the federally funded program, arguing that the extra payments discourage workers from taking jobs. But in an interview with Alaska Public Media’s Casey Grove last week, University of Alaska Anchorage Center for Economic Development director Nolan Klouda said the evidence points to other causes for the labor shortage.

“When economists looked at when the overall benefits expired at the end of the summer, at the end of July of 2020 — you didn’t see any kind of spike in employment happening at that point,” Klouda said. “If, when the generous benefits expired — if those payments were keeping people home, then you’d expect people to suddenly go back to work in droves after that.”

Klouda says that other factors, like health risks and the need to provide childcare, could be keeping people out of the workplace.

Ledbetter acknowledged during a Friday press conference that some Alaskans are struggling to return to work.

“For those Alaskans still burdened by lack of childcare or transportation or other issues, I understand the challenges — this period has been like no other in our history,” Ledbetter said. “However, unemployment is a temporary support system. The benefits are funded through employee contributions, and the system’s sustainability is built upon a healthy economy.”

Another UAA economist, Mouhcine Guettabi, said there are other alternatives the state could pursue to fill those open jobs.

“Cutting unemployment insurance is a fairly blunt instrument that tries to make aid less generous than work,” Guettabi said.

There are other ways to get people to return to work. In an ideal world, Guettabi said, policymakers could make work more attractive.

“You can keep unemployment insurance as-is and then provide some kind of return-to-work bonus,” Guettabi said. “Or make the wages that the worker would potentially earn higher than unemployment earnings. That way, you could potentially get the people who were staying at home because unemployment insurance was more attractive than returning to work — but you could also accommodate the people staying home for other reasons.”

In Montana, which also opted to cut off those extra federal payments, policymakers have added a return-to-work benefit. On Friday, Alaska labor officials said they aren’t planning on offering that type of benefit.

Both Klouda and Guettabi said Friday that there isn’t good data showing whether cutting off unemployment benefits would fix the problem of unfilled jobs.

When asked what data the Department of Labor used to justify its decision to cut off federal payments for unemployed Alaskans, Ledbetter described anecdotal reports.

“We’re hearing from employers, we’re hearing from the business community — I’ve been reading a lot of articles that you all have been writing — and there is a worker shortage,” she said. “We want a strong economy and that’s basically why we made this decision — it’s time to help people get back to work.”

But she also said data about available jobs in Alaska is not anecdotal. According to the Department of Labor, there are more than 16,200 job openings in industries all over the state as of Friday morning.

There are about 32,000 people are filing for unemployment benefits each week.

The added payments will end in Alaska on June 12. An extension of regular unemployment benefits will continue until September, when the federal program expires.

Alaska Public Media’s Casey Grove provided additional reporting.

This is a developing story. Check back for updates.

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