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Impact of states cancelling federal unemployment programs

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Yahoo Finance’s Denitsa Tsekova reports details on states planning to cut-off federal unemployment programs.

Video Transcript

ALEXIS CHRISTOFOROUS: A growing number of states have decided to opt out of that extra $300 a week in unemployment benefits earlier than when it expires in order to entice some folks to get back to work. Well, a new report from JPMorgan finds out that may be more political than it is economic. Denitsa Tsekova here now with those details. Denitsa.

DENITSA TSEKOVA: Exactly, yes, we have JP Morgan, and we also have a similar analysis by the Economic Policy Institute saying that that move of all those states opting out of the program, it's rather a political move and not an economic one. So currently, we have 24 states opting out of some or all federal unemployment programs. And all of these states have a Republican governor. But the economic conditions across those states are very different.

So looking at the JPMorgan analysis, they look at unemployment rates, earnings growth, and participation rates in those states. And they are very different in the different states. For example, some of the states opting out of the programs may have a very tight labor market and strong earnings growth, which may signal a potential for worker shortage and tie into that whole debate that there are not enough workers to hire.

But this is not the case for many of the other states are opting out of the program. For example, Texas, their unemployment rate in April was 6.7%, which is almost double its pre-pandemic level. So in states like Texas, the unemployment rate is a long way from recovering to pre-pandemic level. While in other states that are opting out of the program, the unemployment rate has pretty much recovered.

Similarly, with wages, they have grown [INAUDIBLE] over year in states like Idaho, South Dakota. But they have declined in Oklahoma and Georgia for the same period. So it's such different economic indicators in different states, it's really hard to find out economic reasons for all those 25-- 24 states opting out of the program altogether.

ALEXIS CHRISTOFOROUS: All right, Denitsa Tsekova, thanks so much.