Pros And Cons Of Taking Money From Your Constituents

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On May 10, the Republican governor of North Dakota, Doug Burgum, announced his state would stop paying out federal COVID-19 unemployment insurance (UI) benefits effective June 19.

“These programs have accomplished their goals but are now counterproductive,” Burgum said of his decision, which made North Dakota one of the first of 26 states — 25 of which are led by Republican governors — that cut off pandemic-related jobless aid over the past two months, slashing benefits for more than four million people nationwide several months before the programs were set to expire in September.

But Burgum, a former Microsoft executive who sold his software business to the company for $1.1 billion in 2002, had already been told cutting the UI programs would mean tearing apart the safety net and cutting off aid to people harmed by the pandemic — in materials prepared by his administration.

The COVID-19 jobless aid “provides [a] safety net to almost all ND citizens,” North Dakota unemployment officials noted in a slide deck prepared for the governor a few days before his announcement. That fact was mentioned almost as an aside in the document, which also noted the program was providing “continued funds into [the] ND economy” to the tune of $9 million a week.

In the same presentation, officials at Job Service North Dakota (JSND), the state agency that provides workforce and unemployment services, noted that if the governor were to go through with the cuts, “Individuals directly impacted by the pandemic, medically or otherwise, will likely not be able to receive any benefit via the UI program.”

But JSND listed many more talking points for ending the benefits, such as “some claimants will choose to remain on UI rather than return to work,” and a warning that the state would “remain a target for criminals targeting federal programs through fraud.”

They further noted, “Employers and a large portion of the citizen base do not believe the programs should continue,” but then added as a caveat: “(No official survey completed, so somewhat anecdotal, however many employers have been very vocal about the programs hindering their business operations.)”

The internal documents, provided in response to an open records request by The Daily Poster, reveal the crass political calculus used by officials to justify terminating unemployment benefits that have kept millions of Americans afloat during a historic deadly pandemic. And the records offer a reminder that, for all of their talk in public about protecting small businesses, politicians who cut off jobless aid knew it would punish people devastated by the pandemic and take money out of the economy.

“North Dakota officials made a clear-eyed decision to lose federal funding that was a lifeline for their unemployed residents and their families and provided millions of dollars per week in economic benefits, because of ‘somewhat anecdotal’ data,” said Lindsay Owens, an economist and executive director at the progessive activist group Groundwork Collaborative.

And while Burgum framed ending these benefits as a way to send job applicants to state businesses that were “facing an unprecedented labor shortage as they attempt to recover,” his staff knew the effort wouldn’t help fill every opening.

As JSND executive director Bryan Klipfel had noted in an email to the governor’s policy director, “Even if we ended the federal UI programs, we still would not have enough applicants for the 16,400 open jobs on [the] JSND site.”

In response to questions, Burgum’s spokesperson, Mike Nowatzki, wrote in an email that the governor considered both the “pros and cons” of cutting the unemployment programs.

“Employers Are Not Providing Safe Work Environments”

On May 4, Montana Gov. Greg Gianforte (R) became the first governor to announce his state would cut off federal unemployment benefits early. One day later in North Dakota, Jace Beehler, Burgum’s policy director, asked JSND to look into following Montana’s lead.

“You likely have seen the actions taken by the Montana governor yesterday,” Beehler wrote to Klipfel. “Can your team determine the process and results of ND considering similar actions, with the consequences of those actions?”

JSND’s presentation to the governor’s office a few days later featured a range of business talking points.

“Employers are reporting that generous federal benefits are negatively impacting their ability to hire,” noted the slide deck. “Individuals are applying for jobs to meet UI requirements, but not returning calls, failing to show for interviews, and refusing offers of employment.”

But according to a recent analysis of census data by Arindrajit Dube, an economist at the University of Massachusetts, Amherst, states that terminated federal unemployment payments early saw no uptick in employment in June and July. They did, however, see an increase in financial hardship among their residents.

North Dakota's unemployment rate fell from 4.2 percent in April to 4 percent in May, and held steady in June. The national unemployment rate is 5.9 percent.

In JSND’s presentation for the governor, officials included several reasons why some unemployment beneficiaries didn’t want to return to work, including:

• “Fear of returning to the workforce due to the virus.”
• “Note a need to remain out of the workforce to care for at risk-family members.”
• “Note that employers are not providing safe work environments.”

Burgum allowed North Dakota’s COVID mask rules to expire in January, and the conservative legislature in April barred the governor from imposing future mask mandates, overriding a veto by Burgum.

The day after that bill’s passage, Burgum signed a sweeping coronavirus liability shield law to protect businesses from lawsuits. The law, which was made retroactive to January 2020, bars civil actions over COVID exposure unless they involve “an act intended to cause harm or an act that constitutes actual malice.”

North Dakota has one of the lowest vaccination rates in the nation, and the state, like much of the country, has recently seen a surge in deadly Delta variant cases.

Landis Larson, president of the North Dakota AFL-CIO, said that most people who aren’t returning to the workforce won’t do so “because of pandemic reasons, such as fear of contracting the virus, caring for someone susceptible to the virus, or lack of safety in the workplace.”

As he concluded, “A large amount of money will be taken away from the North Dakota economy, and even if every person who is collecting unemployment insurance could safely return to work, we would still have unfilled jobs. This will do more harm than good.”

A Higher Standard Of Living

JSND’s slide deck emphasized the employer-side take on why people weren’t going back to work, but officials also made clear that it was probably in some people’s best interest to stay on unemployment.

“Federal benefits have allowed individuals to forego child care expenses and receive benefits that have a reduced tax rate,” they noted in the presentation. “This allows for a standard of living equal to or greater than experienced while working.”

While Burgum said in May that “it’s difficult for employers to compete” with the federal programs, JSND’s presentation showed that people on unemployment were earning substantially less than the average worker in the state.

JSND wrote that North Dakota’s average working wage was $54,945. The average unemployment benefit, with the $300-a-week add-on, came out to $38,220 annualized, they wrote.

On the other hand, a person would have to work more than 100 hours a week to earn that much on North Dakota’s minimum wage of $7.25.

An April memo from JSND noted that the federal program adding $300 to claims each week “makes it lucrative for some claimants, particularly low wage earners, to remain on unemployment insurance.”

Nowatzki, the governor’s spokesperson, noted: “​​Gov. Burgum believes wages should be driven by market conditions, not artificially inflated by government programs. With more than 18,000 online job openings in North Dakota in June (up 58.5% from the same month one year ago, according to JSND), employers are offering higher wages, hiring bonuses and other incentives to attract individuals to the job market.”

After weighing the pros and cons of ending the jobless aid, JSND officials recommended ending most or all of the federal aid programs.

If the governor chose to preserve any of the aid programs, officials advised he keep pandemic unemployment assistance (PUA), a program for self-employed workers who don’t qualify for state jobless aid. State officials wrote in April that the PUA program was having little impact on employment, writing that “many of these individuals were not previously in the workforce and have no intention of entering the workforce when federal program availability ends.”

Not long after JSND’s presentation, Burgum announced he would be terminating all of the federal unemployment programs.

“While the number of individuals who could potentially return to work may have been smaller in the PUA category than in [other programs], every pool of potential workers is important,” said Nowatzki. “According to [JSND], many PUA claimants had work experience in fields with significant demand.”

The paper trail behind the governor’s announcement lays bare the shallow motivations leading up to his decision, said Owens at the Groundwork Collaborative.

“This slide deck makes clear what we’ve long known about how officials make decisions about the social safety net,” she said. “The cruelty is, and always has been, the point.”

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