18 states ending federal unemployment benefits

Yahoo Finance’s Denitsa Tsekova breaks down states cutting unemployment benefits amid worker shortage in the labor market.

Video transcript

ALEXIS CHRISTOFOROUS: About two million workers in 18 states could soon see big cuts to their unemployment benefits as states opt out of federal jobless benefits programs. Yahoo Finance's Denitsa Tsekova tells us more now about how those workers will be affected by the cancellation of those benefits. Denitsa.

DENITSA TSEKOVA: Hi, well, yes, it seems like 2 million workers could lose those benefits either completely or see them significantly cut. And this is collectively $5 billion worth of unemployment benefits. It depends on the worker and the state and how many programs they are participating in. But they could lose around $3,000, $4,000 for the time being. And that money is also now going into the local economies and now stimulating them.

We have 18 states, as you said. Arizona, Ohio, and Georgia just joined yesterday. And today we have more states joining. We had Alaska and West Virginia being the latest states. All those states have Republican governors. And most of them joined after the disappointing jobs report we had last week.

So what's happening is starting May or late June, jobless workers in those states will lose that extra $300 of unemployment benefits. But not only that, but also programs like the Pandemic Unemployment Assistance which was available to contractors, gig workers, and other workers won't get any benefits at all. So their benefits will go to 0. All these programs were extended until September 6 nationwide. So those workers will lose around to 12 to 6 weeks' worth of unemployment benefits.

The cutoff in benefits will disproportionately impact people of color. Most of those states, south-- southeastern states, there have a high majority of Black Americans relying on unemployment benefits. For example, in Mississippi, it's 2/3 of unemployment insurance recipients being Black Americans. And in South Carolina and Alabama, it's half of them. Compared to nationwide, this is around three times higher, so this cutoff will significantly impact people in those states.

Lawmakers are currently trying to stop some of that movement. And particularly, we're talking about the Pandemic Unemployment Assistance Program. But from what I'm hearing from experts, while this may happen, it may not happen on time to stop the actual cancellation that's coming in less than a month. So a lot of workers may actually see their benefits going to 0.

ALEXIS CHRISTOFOROUS: Yeah, and that's going to happen quickly. Denitsa Tsekova, thanks for that information. We're going to continue to watch that story.