Bonus Unemployment Payments in Maine: Stimulating or Stifling?

Maine Governor Janet Mills recently announced that the state will provide bonuses for those leaving unemployment to get back to work. The Pine Tree State will use federal funds to allocate one-time, $1,500 payments to workers who start a new job by the end of July or $750 for workers who return to part-time work but are no longer eligible for unemployment payments.

Bonus unemployment payments authorized by the federal government will remain in place until September, but this experiment may not be enough to get people back to work. According to a recent Committee to Unleash Prosperity study, two unemployed Maine parents with two children can currently collect average annualized payments of over $82,000 per year and a maximum payment equivalent to earning $29 per hour.

In addition to creating incentives not to work, the bonus unemployment payments and removal of work-search requirements have led to widespread fraud. Recent reports from the U.S. Department of Labor Inspector General’s office show that more than $63 billion in unemployment benefits were dispersed on falsified claims since the beginning of the pandemic. The Maine Department of Labor estimates that it has cancelled over 48,500 initial claims suspected of being fraudulent and prevented at least $484 million in fraudulent claims since March 2020.

Between the total federal payments offering employees a higher income to not work and rising inflation, federal government policy is trampling small businesses across the country. Maine and the remaining states must pursue policies that help rather than harm small businesses.