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Biden White House tells states they can keep paying extra unemployment benefits with stimulus funds

The Biden White House on Thursday said states that want to provide extra jobless benefits to the unemployed beyond a September cutoff can continue to do so by drawing on previously approved federal stimulus funds.

Millions of unemployed people are set to lose their benefits on Sept. 6 when a temporary federal program put in place during the pandemic expires.

The federal program provides up to $300 extra each week in jobless benefits and also allows self-employed workers to receive compensation. Before the pandemic they were never eligible.

Read: Jobless claims drop to pandemic low of 348,000 in sign companies still hiring despite delta

The Biden administration has determined that $350 billion in relief money allocated to states and localities in March under a $1.9 trillion stimulus package can be used to pay for unemployment benefits, according to a letter sent to the Senate by Treasury Secretary Janet Yellen and Labor Secretary Martin Walsh.

“Even as the economy continues to recover and robust job growth continues, there are some states where it may make sense for unemployed workers to continue receiving additional assistance for a longer period of time, allowing residents of those states more time to find a job in areas where unemployment remains high,” the letter said.

“The delta variant may also pose short-term challenges to local economies and labor markets,” the letter also said.

Half of the U.S. states, all of them led by Republican governors, have already ended payments of extra federal unemployment benefits amid complaints by businesses that they can’t find enough workers. Companies complain generous unemployment benefits have kept many people from going back to work.

A survey by Morning Consult recently found that nearly 2 million people said extra benefits were the main reason they were able to afford to stay unemployed.

The U.S. would likely have 7 million to 9 million additional workers right now had the pandemic never happened at all, economists estimate. As of June there were record 10 million open jobs, a separate government survey showed.

The shortage of labor has forced many companies to raise wages and the Biden administration has urged them to do so, but some are still struggling to fill open jobs. In some cases businesses have had to reduce production or the number of hours they are open.

Of the nearly 8.6 million people getting federal benefits at the end of July, more than 40% lived in New York and California, U.S. Labor Department data showed.

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