Biden's labor secretary says the US doesn't need new unemployment benefits because we're 'headed in the right direction'

Biden's labor secretary says the US doesn't need new unemployment benefits because we're 'headed in the right direction'

Despite pandemic-era unemployment benefits ending on Labor Day, the US added just 194,000 new jobs in September — but Biden's labor secretary says benefits won't return and the economy is headed in the right direction.

However, the numbers show another month of the economic recovery has been hampered by the rise of the Delta variant. And September is also the first month in which the data takes into account the end of federal unemployment benefits.

September's report shows that ending those federal benefits — which included an additional $300 weekly, as well as making gig workers newly eligible for checks — didn't bring workers back. That tracks with research repeatedly showing that the 26 states who opted out of federal benefits early saw little to no impact on employment, but did take an economic hit as a result of ending those programs.

"Over the last four months I've been answering questions about $300 keeping people out of the workforce. Twenty-six states ended it earlier," Labor Secretary Marty Walsh told Insider. "We saw no data that showed that by ending unemployment benefits there was higher participation in the workforce."

Walsh added that "the extra $300 didn't have as big of an impact on people joining the workforce as everyone thought it would have."However, when asked if he'd consider bringing back the enhanced benefits, Walsh said "you don't need to."

 

"We're heading in the right direction," he said. "The unemployment benefit was there because in the beginning tens of millions of Americans were out of work overnight."

The enhanced benefits were first enshrined as part of President Donald Trump's CARES Act, with an additional $600 weekly. Those benefits wound down in July 2020, although an additional $300 weekly was tacked back on in December 2020. President Joe Biden extended the additional $300 a week through his American Rescue Plan, with those benefits winding down on Labor Day.

"When the president filed the American Rescue Plan at the beginning of his presidency, there was still high unemployment rates and still the need to support people because there really hadn't been a path forward," Walsh said. "The past administration didn't have an economic recovery plan, didn't have a plan to bring America back to work. And President Biden laid that out very clearly."

Walsh said that, broadly, September was a "very complex" jobs report — and that the president's "investments in the economy definitely are working and putting us on a pathway to strong recovery." He also pointed to positive signs like the unemployment rate falling, and wage growth continuing.

The end of benefits impacted millions of Americans

When federal benefits expired on Labor Day, over 8 million people lost their benefits completely. Experts had warned it was too early for programs to end, as the Delta wave gripped the nation and squashed economic recovery. Unemployed Americans feared what would come next, and if they'd have to expose themselves to further risk if they applied to in-person work.

In August, Walsh and Treasury Secretary Janet Yellen wrote a letter confirming that unemployment wouldn't extend past September 6. But they also said that states could continue benefits on their own past Labor Day, writing that "in states where a more gradual wind down of income support for unemployed workers makes sense based on local economic conditions, American Rescue Plan funds can be activated to cover the cost of providing assistance."

But no states did, with at least one — Washington state — saying it was too costly to maintain weekly benefits, and congressional action would be needed to extend them. A month out, that action hasn't come.