POLITICS

Despite Injunction, Indiana Won’t Restart Federal Unemployment Benefits

The state suggested it couldn’t pay the benefits even if it wanted. The Biden administration is curiously quiet.

The state of Indiana won’t restart federal unemployment benefits even after a judge ordered it to do so, the state’s labor department said this week. 

Indiana Gov. Eric Holcomb is one the 25 Republican governors who ended the state’s participation in the federal benefits before they expire in September. A group of unemployment claimants sued, and a state judge said last week that Holcomb should restore the benefits.  

Indiana is appealing the judge’s injunction, but the state Department of Workforce Development claims it can’t bring back the benefits. 

Indiana’s Department of Workforce Development “is determining how to proceed because the federal programs in Indiana no longer exist after their termination on June 19,” spokesman Scott Olson said in an email. 

The federal benefit programs included an extra $300 per week for all claimants, plus benefits for gig workers and people unemployed longer than six months, groups that are normally ineligible. Congress created the programs last year as part of the Coronavirus Aid, Relief and Economic Security Act, its big initial response to the coronavirus pandemic, and earlier this year extended them until Sept. 6. 

Republican governors have canceled the benefits early, saying the extra money has made it too difficult for businesses to hire workers. Congress first boosted benefits by $600 last year, but this year’s smaller supplement has become a bigger political target with the economy reopening and a Democrat in the White House. 

Indiana has appealed the injunction, arguing that more benefits would harm the state’s economy. (The case hinges on an Indiana law requiring the state to obtain available federal benefits for its workers; there is not yet a broader federal lawsuit over the benefit cuts.)

States paid the federal benefits after entering voluntary agreements with the U.S. Labor Department, and canceled the benefits simply by withdrawing from those agreements. It’s not clear why Indiana couldn’t enter a new agreement if it wanted to; Olson said he couldn’t comment further because of the litigation. A spokesman for the U.S. Labor Department did not respond to a request for comment. 

“States signed their agreements within a few days of the Cares Act and and I am sure Governor Holcomb could do the same again now if he wanted,” Andrew Stettner, a senior fellow with The Century Foundation, said in an email. 

The Biden administration has rejected arguments from labor law experts and Sen. Bernie Sanders (I-Vt.) that the law requires the Labor Department to pay at least the gig worker benefits, if not the weekly supplement. Democrats previously suggested they would push for the benefits to continue past September, but Biden has said it’s appropriate for the benefits to end at that time. 

Some Democrats on Capitol Hill, led by Sen. Ron Wyden (D-Ore.) and Rep. Don Beyer (D-Va.), have pushed for sweeping reforms to the unemployment system, since it lets states slash benefits and fails to cover significant swaths of the workforce. It’s not clear if party leaders intend to include the reforms in upcoming legislation.