South Dakota jobs market will still be tight, even after federal bonuses are cut off, Hultman says

Capitol News Bureau

PIERRE, S.D. (KELO) — One day after the announcement that South Dakota plans to withdraw from federal programs that pay additional benefits to people out of work, the state’s secretary of labor said Thursday she’s never before seen workforce challenges like they are right now.

Marcia Hultman told the state Banking Commission that the shortage reflects a combination of situations. There’s what she described as COVID-19 hesitancy; federal unemployment bonuses that help discourage some workers from returning; and the seasonality of South Dakota’s construction, tourism and hospitality sectors, especially with foreign workers unable to travel amid the pandemic.

Hultman’s remarks came on the heels of Governor Kristi Noem declaring on Wednesday that South Dakota will stop participating in three federally paid unemployment programs. Hultman said states are required to give 30 days notice that they’re leaving. Effective the week ending June 26, South Dakota will stop payments for:

— Pandemic Emergency Unemployment Compensation (PEUC), which potentially would have provided claimants up to 53 weeks of federal support after they exhausted their traditional 26 weeks of regular state unemployment compensation.

— Pandemic Unemployment Compensation (FPUC), which pays $300 bonuses to all claimants receiving unemployment benefits regardless of the program.

— Pandemic Unemployment Assistance (PUA), which provides benefits to the self-employed, the underemployed, independent contractors, and individuals who have been unable to work due to health or COVID-19-related reasons.

South Dakota also was the only state that didn’t participate in the federal Lost Wages Assistance (LWA) program last fall.

The latest weekly numbers released Thursday for South Dakota showed 266 initial claims for state unemployment benefits for the week ending May 8 and 2,576 continuing state claims for the week ending May 1.

As for the programs that will be discontinued in late June, continued PUA claims totaled 534 and continued PEUC claims were 1,277 for the week ending April 24. “It’s maybe not going to be the silver bullet that everybody expects. It will make a difference.” Hultman said.

That’s because the South Dakota job board currently lists about 23,000 openings, she said.

For the similar week last year, South Dakota had about 25,000 people receiving unemployment benefits. By March four states — Vermont, Utah, South Dakota and Nebraska — were down to 2.9% unemployment. Hultman said in a typical year her department sends roughly 7,000 of the federal 1099 tax forms to unemployment recipients. In 2020, there were 47,000 sent because of the pandemic.

The commission also heard from Rich Cofer, the Kansas City regional manager in the Federal Deposit Insurance Corporation’s division of insurance and research. He said the nation’s drop in employment from the pandemic in April 2020 was the most severe on record by a large margin.

Now the reverse is true and not just in South Dakota. “Very, very tight labor markets right now. We’re hearing this from all the states in my region of the FDIC,” Cofer said. “There’s this tremendous difficulty” finding people for the open jobs.

It’s not just workers that businesses are short of, he noted. Businesses have problems getting supplies and key components such as microchips and face lots of issues from pandemic-related dislocations. “That’s the pain that we’re feeling right now.”

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