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Gov. Reeves Ending Federal Aid for Unemployed Mississippians, Rejecting ‘Rescue Act’ Funds

Governor Tate Reeves stands in front of the seal of Mississippi speaking
Gov. Tate Reeves said today that Mississippi will opt out of weekly federal unemployment benefits of $300 starting on June 12, 2021. AP Photo/Rogelio V. Solis

Unemployed Mississippians will no longer be eligible for $300 per week in federal COVID-19 unemployment benefits after Gov. Tate Reeves announced today that Mississippi will opt out next month.

“It has become clear to me that we cannot have a full economic recovery until we get the thousands of available jobs in our state filled,” Reeves said in an announcement on social media.

Since last week, governors in Montana, South Carolina, Arkansas and Alabama have also announced plans to end participation in the federal COVID-19 unemployment relief program.

The announcement comes after Mississippi House Speaker Philip Gunn, a Republican, sent a letter to the governor this morning urging him to consider ways to help businesses struggling to hire new employees—including by possibly ending federal COVID-19 unemployment benefits in the state. 

‘Suffering From A Labor Shortage’

In the letter, first reported earlier today by the Daily Journal’s Caleb Bedillion, Gunn told Reeves that he and “other House members are continually being contacted by increasingly desperate small businesspeople who inform us their businesses are at risk.”

“These businesses are no longer suffering from a lack of demand due to COVID-19,” Mississippi House Speaker Philip Gunn said in a May 10, 2021 letter to Gov. Tate Reeves. Photo by Ashton Pittman

“They report that they cannot get employees to return to work because they can earn more from combined federal and state unemployment benefits than their normal wages. … These businesses are no longer suffering from a lack of demand due to COVID-19,” the speaker wrote in the letter dated March 10. “Rather, they are suffering from a labor shortage caused by unemployment benefits that exceed normal wage levels for productive work.”

The State provides maximum weekly unemployment benefits of up to $235, while President Joe Biden’s America Rescue Plan provides an additional $300 per week. Mississippi law requires anyone making unemployment claims to show that they first sought and were unable to obtain employment.

“However, employers tell us that MDES is not effectively enforcing that requirement, which claimants easily evade,” Gunn wrote in his letter.

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Rep Blames ‘Failure to Address Low Wages’

Mississippi House Rep. Jeramey Anderson, a Democrat from Moss Point, suggested in a tweet this afternoon that he disagreed with Gunn.

“To ask people to go back to work for low wages instead of receiving a ‘living wage’ is asinine,” said Mississippi House Rep. Jeramey Anderson, a Moss Point Democrat. Photo by Ashton Pittman.

“Unemployment benefits are not the problem—our failure to address low wages in our state is the real issue. To ask people to go back to work for low wages instead of receiving a ‘living wage’ is asinine,” Anderson said, adding that he plans to re-introduce a bill to raise Mississippi’s minimum wage from the federally mandated $7.25 per hour to $9 per hour. Anderson has offered the bill in past sessions, but House leaders allowed it to die without a vote.

Gunn’s letter did not say how much the business owners cited in his letter had offered prospective job seekers. Restaurant businesses have been some of the most vocal in recent weeks about their difficulty finding employees. Mississippi restaurants can pay as little as $2.13 per hour under the federal hourly tipped minimum wage law so long as employees earn enough in tips to add up to $7.25 per hour.

“It is time for Mississippi to take steps to ensure that unemployment is only available to those who legitimately cannot find work,” Gunn wrote. “We realize that there are many people impacted by the pandemic, but as governor, you have the ability to make sure that MDES (the Mississippi Department of Employment Security) is doing everything within its power to make sure that if a person is able to work and offered a job that they can go back to work.”

Labor Force Participation at Pre-Pandemic Levels

In February 2020, before the pandemic arrived in the state and lockdowns began, Mississippi’s unemployment rate stood at 5.8%, Bureau of Labor Statistics data show. Amid lockdowns, the unemployment rate shot up to 15.7% in April 2020 before coming down again as the economy reopened. By March 2021, Mississippi’s unemployment rate was 6.3%.

But BLS data show that Mississippi’s labor-force participation rate, which BLS says measures “the percentage of the civilian non institutional population 16 years and older that is working or actively looking for work,” was 56.1% in March 2021—the same as it was in February 2020.

BLS data lists 1,200,858 Mississippians as being employed in March 2021 compared to 1,209,022 in February 2020. The number of unemployed Mississippians in March 2021 was 80,270 compared to 74,282 in February 2020.

White House Addresses Concerns

Earlier this afternoon, the White House said in a press release that “the Department of Labor will reaffirm long standing UI requirements.”

“Specifically, the Secretary of Labor will issue a letter to states to reaffirm that individuals receiving UI may not continue to receive benefits if they turn down a suitable job due to a general, non-specific concern about COVID-19,” the White House press statement said.

President Joe Biden participating in a virtual phone conference
President Joe Biden’s American Rescue Plan includes money to assist businesses, with specific help for the restaurant and hospitality industry. Official White House Photo by Adam Schultz

The statement also noted that the administration’s Restaurant Revitalization Fund will “aid restaurants, bars, food trucks, and other food and drink establishments” with grants that “will give restaurants and bars the flexibility to hire back workers at good wages.”

“Today, the administration is sending the first grants under the program to 16,000 hard-hit restaurants,” the White House said.

The administration also noted that, through the 2021 American Rescue Act, Congress and Biden expanded the Employment Retention Credit, a 2020 CARES Act provision. It now “offers eligible employees with 500 or fewer employees a tax credit of 70 percent of the first $10,000 in wages per employee per quarter.”

“In other words, this refundable, advance-able credit will cover up to $7,000 in wages per quarter or $28,000 per year for each employee,” the White House statement says.

Reeves: UI Assistance No Longer Necessary

Two hours after the White House offered states its “clarification” on unemployment eligibility with an outline of plans to assist businesses, though, Gov. Reeves announced that Mississippi would nevertheless end its participation in COVID-19 unemployment aid.

“The purpose of unemployment benefits is to temporarily assist Mississippians who are unemployed through no fault of their own. After many conversations over the last several weeks with Mississippi small business owners and their employees, it has become clear that the Pandemic Unemployment Assistance (PUA) and other like programs passed by the Congress may have been necessary in May of last year but are no longer so in May of this year,” Reeves wrote. 

“Therefore, I have informed the Department of Employment Security to direct the Biden Administration that Mississippi will be opting out of the additional federal unemployment benefits as early as federal law allows—June 12, 2021.”

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