PHOENIX (3TV/CBS 5) -- Gov. Doug Ducey announced on Thursday morning that effective July 10, the state will no longer take federal money for supplemental unemployment benefits. Ducey said instead, the state will offer one-time bonuses to returning workers, along with child care support, educational opportunities, and rental assistance.

Doug Ducey

File photo of Gov. Doug Ducey

“In Arizona, we’re going to use federal money to encourage people to work ... instead of paying people not to work,” Ducey said.

Return-to-work bonuses

This puts an end to the extra $300 a week payments to unemployed workers. Ducey says the plan aims to help Arizonans get back to work. It means unemployed Arizonans will again get $240 a week, the second-lowest weekly rate in the nation.

The state plans to set aside $300 million of federal resources to offer a one-time bonus of $2,000 to eligible Arizonans who return to work and get a full-time job. Anyone who gets a part-time job that is eligible will receive $1,000. A worker who gets a job earning more than $25 an hour does not qualify.

Though Ducey said the federal assistance incentivizes people not to work,  Andrea Ellis, a single mother of two disabled boys in Gilbert says that's not the case at all. "There is zero way for me to work until August," she said. "I have no options."

Because her kids failed school during the pandemic, they have to go back and forth to summer school for a few hours every day. "I can't take a job -- what job is going to take me like that?" Ellis said.

Education incentives

The state plans to provide $7.5 million for community college scholarships for those currently unemployed and who are eligible for return-to-work bonuses. About $6 million will be available for GED test prep and exam fees for eligible workers without a high school diploma.

Child care

Three months of child care assistance will be given to people who have kids and were collecting unemployment benefits and will be returning to work.

Ducey set a goal of getting as many Arizonans as possible back to work by Labor Day, Sept. 6. This comes following reports that employers are having trouble competing with the federal government's unemployment payments, insisting that people would rather stay home and not work than find a job.

Arizona's economy remains healthy

Ducey slashed unemployment checks by more than half despite celebrating the health of the state’s economy throughout the pandemic, noting the state shed fewer jobs than most. In Arizona, more people are employed now than before the pandemic, though the unemployment rate is also higher because the pool of jobseekers has grown.

“Although more people are ready to work today in Arizona than before the pandemic, many businesses are struggling to fill vital positions,” Ducey said in a statement. ”We cannot let unemployment benefits be a barrier to getting people back to work.”

The business community reacted positively to the governor’s decision, with Ducey’s office releasing statements praising his decision as a way to kick-start the economy. Other groups also lauded the effort.

“Paying some people more on unemployment than they made working full-time, even as their jobs are in demand, is counterproductive to recovery,” said Stephen Shadegg, Arizona director of the conservative group Americans for Prosperity.

At $520 a week with the current $300 federal supplement, an unemployed Arizona worker is getting $13 per hour, that’s 75 cents above the state’s minimum wage of $12.15 per hour. At $240 per week, the unemployed will be getting $6 per hour.

Valley economist Elliott Pollack thinks the plan will work for a lot of people -- although not everyone. "This is a very clever way of doing it," he said. "Rather than paying people to stay out of work, they're taking the same money and paying them to go back to work."

"Devastating blow"

Progressive groups said it was the wrong move and will hurt ordinary Arizonans struggling to make ends meet while seeking work.

“This decision cuts more than half of the weekly assistance provided to Arizonans and is a devastating blow to struggling families,” Niles Harris, executive director of Honest Arizona, said in a statement. “The Governor must reverse this decision and allow Arizonans to receive the federal assistance they deserve.”

The Arizona Center for Economic Progress, another progressive group, noted that Ducey’s action will cost workers $1 billion in federal relief while his bonus program will divert $300 million in American Rescue Plan funds from other uses.

Ducey’s move follows the lead of 12 other states led by Republican governors who acted in the past week and argued in ending the extra unemployment pay that it was providing an incentive for laid-off workers to stay off the job.

Ducey’s decision will affect about 32,000 people currently receiving regular unemployment and another 176,000 people enrolled in programs for the long-term unemployed and contract or gig workers, according to data from the state Department of Economic Security.

Businesses have cited the extra $300 as a reason they are struggling to find workers, but there are other factors at play preventing people from returning to work. Some are worried about exposure to the coronavirus if they return to service sector jobs, according to government surveys, and many working mothers have left the workforce to care for children still attending school online.

Ducey aims to help those parents by providing three months of child care assistance for people who return to work but earn less than $25 an hour. A variety of federal assistance programs will be used to pay for the aid. He also is using federal cash to provide community college scholarships and high school equivalency diploma preparation for unemployed workers.

Ducey said the state’s economy is taking off as nearly half the population has now had at least one dose of COVID-19 vaccine.

“With ample supplies of the COVID-19 vaccine on hand and millions of Arizonans vaccinated, people feel safer and are finally returning to life in Arizona as we knew and loved it before,” Ducey said in a video announcing his moves.

Gov. Doug Ducey cut the federal unemployment funding in the state starting in July but he's giving people a $2,000 bonus to return to work.

Arizona’s unemployment soared after layoffs triggered by the pandemic last March. The state’s unemployment trust fund, which builds up cash during periods of low unemployment, was at $1.1 billion before the pandemic hit a year ago. It had fallen below $90 million in February, but has since risen with quarterly employer payments and federal money Ducey added from virus relief funds.

Ducey’s action Thursday came as the U.S. Labor Department said the number of Americans seeking unemployment benefits fell last week to 473,000, a new pandemic low and the latest evidence that fewer employers are cutting jobs as consumers ramp up spending and more businesses reopen.


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