People receiving unemployment benefits in Maryland will soon have to document that they’re looking for a new job as the state joins others around the nation in reinstating work-search requirements.
The change will come next month as Maryland also cuts benefits to tens of thousands of unemployed residents covered by federal unemployment programs. The changes take effect the week of July 4.
Unemployment insurance traditionally requires recipients to show they’re looking for a job. That changed in 2020 as the coronavirus pandemic hit. Maryland, like other states, suspended its work-search requirement last March as businesses shut down and record-breaking numbers of people lost their jobs.
Last month, Democratic President Joe Biden directed the U.S. Department of Labor to work with states to reinstate work-search requirements if health and safety conditions allow.
Maryland Gov. Larry Hogan said that month the state would do so. The state released more details this week as Hogan also announced he would end Maryland’s participation in pandemic unemployment programs that enhanced benefits, including the extra $300 weekly payments and coverage for the self-employed.
“The main factors in the decision are that we’ve fully reopened the state, vaccines and jobs are in good supply, and there is a presidential directive to reinstate the requirements,” Mike Ricci, a spokesman for the Republican governor, told The Baltimore Sun in an email.
Maryland claimants received an email in mid-May saying the requirement would be reinstated soon.
Once the work-search rule resumes, people receiving unemployment benefits will need to complete three “re-employment activities” per week, state Department of Labor spokeswoman Fallon Pearre said. These could include things like submitting a job application, attending a virtual recruitment event, or completing a workshop at an American Job Center location, part of a federally funded network of centers offering free help for job seekers.
Business groups around the country have been pushing to have the requirement reinstated, saying it will help them fill openings. In Maryland, they include trade groups representing industries such as the retail and hospitality sectors and small businesses.
“Finding employees as demand for hotels is increasing has been a huge challenge,” said Amy Rohrer, president and CEO of the Maryland Hotel Lodging Association.
Meanwhile, employers are concerned about the health of the state’s unemployment trust fund, which affects the taxes businesses pay, said Cailey Locklair, president of the Maryland Retailers Association.
The fund is used to pay unemployment benefits and, when it’s depleted, businesses are charged more to replenish it.
As more people return to work, “the tax burden is going to lessen for employers,” Locklair said.
Maryland is using $1.1 billion in federal coronavirus relief funds to replenish the trust fund, so businesses will not see increased unemployment tax rates for two years.
Research suggests that requiring a work search shortens the length of time people are on unemployment. But for workers, that doesn’t mean a better outcome, said Steve Gray, senior counsel with the National Employment Law Project, which advocates for low-wage workers and the unemployed.
“Limiting the time [someone is receiving] benefits doesn’t necessarily mean they’re back to work in a better situation,” Gray said.
Even with the economy bouncing back, people may face other barriers in getting back to work, such as lack of child care, he said.
“It doesn’t address any of those concerns,” Gray said of the work-search requirement.
He added that the availability of jobs and the local unemployment rate can vary widely within a state.
The latest figures show Maryland’s unemployment rate was 6.2% in April, down from its peak of 9% the previous April. It’s still higher than before the pandemic — the overall rate was 3.5% in 2019.
In Baltimore, the jobless rate stood at 7.6% this April, the latest data available.
Work-search rules vary by state in terms of the number of job contacts someone must make weekly and other factors, said Marta Lachowska, a senior economist with the W.E. Upjohn Institute for Employment Research in Kalamazoo, Michigan.
The long-standing criticism of work-search requirements is that they pressure people to take jobs that aren’t a good fit, leading to a “vicious cycle” of lower earnings, she said.
Lachowska and colleagues analyzed an experiment in Washington state to examine the effect of work-search requirements on employment outcomes. They found that for workers who permanently lost a job, the requirement resulted in “greater earnings in the year following job loss, a shorter spell of nonemployment, and longer tenure with the first post-claim employer.”
“We didn’t find any evidence that these requirements would pressure people into accepting bad jobs,” Lachowska said.
Throughout the pandemic, Marylanders have struggled to get unemployment payments amid system crashes, backlogs and other problems as the system became overwhelmed.
Del. Lorig Charkoudian said she worries that adding the work-search requirement will present another complication for the claims system to handle, leading to more delays in benefits. The Montgomery County Democrat sponsored legislation to address customer service, transparency and other issues in the state unemployment system.
“We still have people who are waiting months for some glitch to be worked out,” Charkoudian said. “The concern I have is now with the work-search requirement, you’re adding another layer to what has to be done in the system online.”