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Lawsuit seeks to force Alabama into distributing federal unemployment dollars

In the midst of a labor shortage crisis and record low unemployment, a lawsuit has been filed seeking to force Alabama back into federally-funded pandemic unemployment compensation programs.

The plaintiffs in the case are asking a court in Montgomery County to require Gov. Kay Ivey and Labor Secretary Fitzgerald Washington to opt back into several federal programs providing benefits to those unable to find jobs as a result of the pandemic.

Ivey discontinued the federal unemployment supplements on June 19 as part of an effort to bolster the state’s workforce. The move included stopping the Federal Pandemic Unemployment Compensation (FPUC), which provided for a supplemental $300 weekly payment to recipients of unemployment compensation.

When asked about the lawsuit, Ivey press secretary Gina Maiola emphasized to Yellowhammer News the strength of the state’s economy and the limited amount of time for which the federal supplement was intended to serve as an option.

“Governor Ivey was one of the five leading governors in the country to end what was intended to be a short-term relief program from the federal government,” Maiola stated. “Her decision has led Alabama to one of the strongest economic comebacks in the country, and at 3.3%, we have the lowest unemployment rate in the southeast.”

Labor economists generally regard the Yellowhammer State’s 3.3% rate to be at or near full employment.

The four plaintiffs to the lawsuit allege that the state’s discontinuation of the benefits was done without expert input. They wrote in their complaint:

The defendants have not commissioned or presented expert studies indicating that the federal
pandemic unemployment benefits are the cause of continued unemployment in Alabama despite
a duty “to employ experts and to carry on and publish the results of investigations and research
studies [related to unemployment in Alabama].

Small businesses struggling to fill open jobs applauded Ivey’s action, at the time of her decision.

Rosemary Elebash, state director for the National Federation of Independent Business, explained that the labor shortage has hindered small businesses from meeting the needs of their customers.

“Our members say job openings outnumber qualified job applicants, but we believe Governor Ivey’s decision to end the federal unemployment supplement early on June 19 will encourage more people to reenter the workforce,” Elebash remarked in early June.

Unfilled job openings continue to prevent growth in certain sectors of the economy.

“As we have a vaccine that is readily available and more jobs available today than prior to the pandemic, Governor Ivey stands by her decision to end participation in all federal pandemic unemployment compensation programs,” Maiola concluded.

Earlier this month, The Wall Street Journal chronicled the difficulties that Alabama businesses were having finding workers.

The WSJ wrote:

The metropolitan area competing for the tightest labor market in the nation isn’t a tech hub on the West Coast, or a boomtown in Texas. It is Birmingham, Ala., a southern city with an unemployment rate that is nearly half the national level.

Examples provided by the WSJ included The Essential restaurant in Birmingham which had to close for brief periods due to worker shortages and Associated Grocers of the South which had about 40 open jobs in late July, including forklift operators, clerks and mechanics.

NFIB’s July jobs report announced that 49% of business owners had job openings that could not be filled, a 48-year record high.

The plaintiffs in the lawsuit against Ivey and Washington are seeking injunctive relief under which the court would direct the state officials to reverse their termination of the federal benefits.

Tim Howe is an owner of Yellowhammer Multimedia

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