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Iowa to stop paying $300 federal unemployment benefits next month

Gov. Kim Reynolds, citing severe workplace shortages, says the state will end its participation in pandemic-related benefits programs June 12.

DES MOINES, Iowa — Thousands of Iowans will stop receiving additional federal pandemic-related unemployment money next month, with Gov. Kim Reynolds citing a strong labor market and a recovering economy.

The last week $300 Federal Pandemic Unemployment Compensation (FPUC) benefits will be paid is the week ending June 12.

Reynolds said the change is an effort to address the state’s severe workforce shortage. 

“Federal pandemic-related unemployment benefit programs initially provided displaced Iowans with crucial assistance when the pandemic began,” she said in a statement. “But now that our businesses and schools have reopened, these payments are discouraging people from returning to work. Our unemployment rate is at 3.7 percent, vaccines are available to anyone who wants one, and we have more jobs available than unemployed people.”

“The overwhelming message we receive from employers these days is the lack of workforce that is adversely affecting their ability to recover from the pandemic," Iowa Workforce Development Director Beth Townsend said.

Iowa will continue to provide regular state unemployment insurance benefits to those who are eligible.

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The state will also no longer waive employer charges for COVID-related unemployment insurance claims starting June 13.

“Regular unemployment benefits will remain available, as they did before the pandemic, but it’s time for everyone who can to get back to work,” Reynolds added. “This country needs to look to the future, and Iowa intends to lead the way.”

Iowa is the sixth state to announce it will refuse the federal unemployment benefits. Alabama, Mississippi, Arkansas, Montana and South Carolina state leaders announced federal unemployment benefits would end for its residents in the coming weeks.

According to the CARES Act, states can refuse the federal money but must give a 30-day notice.

The Iowa Association of Business and Industry, the state’s largest and oldest business organization, applauded Reynolds' decision.

“Iowa had a workforce shortage prior to the pandemic. The continued extended benefits have only exacerbated the challenge and slowed our recovery," ABI President Mike Ralston said.

Democratic State Senate leader Zach Wahls, who represents District 37 in eastern Iowa, countered by saying that "makes no sense for Governor Reynolds to pull the rug out from under unemployed Iowans while we are in the grip of a worldwide pandemic.

 As President (Joe) Biden said, 'People will come back to work if they're paid a decent wage," Wahls said. 

Since April 4, 2020, a total of $1,976,059,033 in FPUC benefits has been paid.

Iowa's unemployment rate for March was 3.7%.

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