Opting Out: Arkansas’s Economy Is Booming Since Ending the Destructive Unemployment Expansions

In May 2021, Arkansas Governor Asa Hutchinson was faced with a major problem: The state still had not recovered the nearly 32,000 jobs lost during the peak of the pandemic. Individuals were still dropping out of the labor force. Despite a fully opened economy, nearly twice as many people were collecting unemployment benefits as before the pandemic hit.

This slow job growth was not for lack of economic activity: Retail sales were up nearly 40 percent, with some industries seeing sales more than double. In fact, businesses were desperate for workers to help meet demand. Employers in Arkansas had nearly 80,000 jobs sitting unfilled—the highest level ever recorded. Even with wages reaching record-high levels and continuing to grow, Arkansas businesses simply could not attract enough workers.

One big reason: Pandemic-related unemployment programs were discouraging work. These federal programs provided a $300 weekly unemployment bonus on top of Arkansas’s regular unemployment benefits, extended how long people could stay on unemployment to 79 weeks, and waived eligibility requirements. In many cases, individuals could collect more in unemployment and other welfare benefits by staying home than by returning to work.

On May 7, Governor Hutchinson decided it was time to change course and jumpstart the Arkansas economy. He announced his plan to help solve the worker shortage crisis by ending the destructive unemployment expansion. Arkansas became one of the first states to end the pandemic-related unemployment programs, effective June 26. This decision set the stage for an Arkansas economic comeback—and now, just a few weeks in, that is exactly what is unfolding in the Natural State.