Expanded unemployment benefits are out; return-to-work bonuses are in

HELENA (MTFP) — Citing Montana’s “severe workforce shortage,” Republican Gov. Greg Gianforte said Tuesday the state will be the first in the nation to end enhanced COVID-19 pandemic unemployment benefits, replacing them with a $1,200 bonus for unemployed workers who return to work.

“Montana is open for business again, but I hear from too many employers throughout our state who can’t find workers. Nearly every sector in our economy faces a labor shortage,” Gianforte said in a statement. “Incentives matter, and the vast expansion of federal unemployment benefits is now doing more harm than good. We need to incentivize Montanans to reenter the workforce.” 

The state unemployment insurance program, funded mostly by employer contributions, offers partial salary replacement to workers who are laid off or have had their hours cut. Over the course of the pandemic, Montana had used federal money to increase weekly payments and relaxed some rules around the program. The state has extended eligibility to self-employed workers, let workers stay on unemployment rolls beyond 13 weeks and exempted beneficiaries from being required to actively seek new work.

Funding included in the American Rescue Plan Act passed in March had been slated to provide people claiming unemployment in Montana with an extra $300 a week beyond their standard benefits through early September. Gianforte said Montana will instead return its unemployment insurance system to its pre-pandemic rules and benefit levels June 27.

Rather than expanded unemployment benefits, the state will offer the $1,200 return-to-work payments using flexible funding from the rescue plan act. 

House Bill 632, which the Legislature used as a mechanism to formally allocate Montana’s more than $2 billion in stimulus money, was signed into law by Gianforte last week. An Economic Transformation and Stabilization and Workforce Development Advisory Commission created by the bill met for the first time Tuesday morning, endorsing a $15 million allocation for the Return-to-Work Bonus Initiative. The bill specifies that the economic commission and other advisory groups will make recommendations to the governor, who has formal authority to spend the money based on the Legislature’s broad allocations.

Department of Labor Workforce Services Division Administrator Scott Eychner said at Tuesday’s meeting that workers who are currently on the unemployment rolls will be eligible for the one-time $1,200 payment after completing four weeks at a new job. The $15 million allocation, enough to provide the bonuses to 12,500 workers, will be available through the end of October on a first-come-first-served basis.

The intent, Eychner said, is for the money to help workers address barriers like childcare access or lack of reliable transportation that may be keeping them from rejoining the workforce.

“We believe that this money would in some sense, maybe not wholly, but in large part, would go to help resolve some of those issues,” he said.

The economic advisory commission includes members of Gianforte’s administration as well as Republican and Democratic lawmakers. The group endorsed the return-to-work program unanimously, though House Minority Leader Kim Abbott, D-Helena, protested that she hadn’t been given enough time to fully consider the proposal.

“I think I like it,” Abbott said. 

The economic advisory commission discussion didn’t reference the governor’s decision to bring the pandemic unemployment benefits to an end, which was announced later Tuesday. Abbott said following the announcement that she hadn’t been aware the other decision was pending.

“I’m worried about what this means for people who are still depending on these benefits as we come out of the pandemic,” Abbott said.

“I am frustrated that I voted on something without understanding the whole context of the vote,” she added.

Republic Sen. Steve Daines applauded Gianforte’s announcement in a statement.

“Across Montana we’re seeing small businesses put up ‘help wanted’ or ‘now hiring’ signs. We’re even seeing some Montana small businesses close because they can’t find enough workers to fill openings,” Daines said. “Montanans can safely return to work and small businesses throughout Montana have plenty of job openings.”

A spokesman for Sen. Jon Tester said in an email Tuesday that the Democratic senator also supports ending Montana’s pandemic-expanded unemployment benefits. 

“What works for Montana might not work for every state but the American Rescue Plan has been successful in quickly putting our economy back on the path to full recovery, so Senator Tester supports discontinuing the enhanced pandemic unemployment program earlier than originally planned,” said Tester press secretary Roy Loewenstein.

Tester’s office also applauded the back-to-work initiative Tuesday, saying he is “proud to have secured these funds through the American Rescue Plan that are being used today to support Montanans who are ready to return to work.”

There are now more weekly job postings than there were before the pandemic, the labor department said in a brochure explaining the shift in benefits, and the state unemployment rate is nearly back to pre-pandemic lows at 3.8%.

“Today, the biggest threat to Montana’s economy isn’t the virus — it’s a critical labor shortage affecting nearly every industry,” the department said.