Unemployment benefits in Indiana have been in flux for the past few months.

On Monday of last week, Indiana officials filed a second appeal asking the Indiana Court of Appeals to stay an order compelling the state to continue paying federal pandemic unemployment benefits.

The appeal marks Governor Eric Holcomb’s continued efforts to halt Indiana’s participation in three federally funded, state-administered unemployment programs.

The governor first announced his decision to withdraw from the federal programs in late May. Citing ‘help wanted’ signs across the state, he contended that generous federal benefits discouraged Hoosiers from returning to work, making it hard for businesses to find employees.

Chief Unemployment Insurance Officer Regina Ashley explained those programs, which were first authorized under the CARES Act last year.

"Those include the $300, weekly add-on - that's called the Federal Pandemic Unemployment Compensation Program, or FPUC. Also, the benefits to independent contractors, gig workers and those otherwise not eligible for unemployment - referred to as the Pandemic Unemployment Assistant, or PUA, program. Third, the extension of benefits beyond the normal 26 weeks called the Pandemic Emergency Unemployment Compensation program, or PEUC," said Ashley.

When Governor Holcomb’s order went into effect after the week ending June 19th, over 200 thousand Indiana residents saw their unemployment benefits reduced or eliminated, according to data from the Century Foundation. However, after two legal groups filed suit, Marion County Superior Court Judge John Hanley issued a preliminary injunction. The preliminary injunction, issued in late June, required the state to continue paying the federal benefits until a final decision is reached in the case.

Professor Kenneth Dau-Schmidt, who studies labor and employment law at the Indiana University Maurer School of Law, explained the legal dispute over pandemic unemployment in Indiana.

"A group of five workers and concerned clergy in Indianapolis filed a lawsuit," he said, "the basis for their argument was: under Indiana law, the state is obligated to apply for all federally provided benefits that are available for unemployment compensation."

The state’s newest appeal argues that the Marion County judge abused his discretion when he issued the preliminary injunction. The state maintains that the governor can withdraw Indiana from the federal programs at his discretion.

Last week, the Indiana Department of Workforce Development resumed paying federal unemployment benefits. Unemployed Hoosiers could file retroactively for benefits beginning the week ending June 26th.

Economists have expressed mixed opinions about the effects of expanded unemployment benefits on the labor market. Kristoph Kleiner, assistant professor of finance at IU’s Kelley School of Business, explained the rationale for cutting the federal benefits.

"Over half of the states have decided to try to cut off these extended unemployment benefits and Indiana is one of them," he said. "A number of businesses have said that they face labor shortages one way or another. They're essentially trying to hire workers, and they aren't able to get them."

However, Professor Kleiner cautioned that reducing unemployment benefits is no panacea.

"We still have reasons why people, for one reason or another, might be out of work," he said.

Professor Dau-Schmidt suggested that the expanded benefits might be part of a broader trend in which employers must improve job compensation to attract and retain workers.

"I think doing away with those benefits isn't going to magically clear up the problems in the labor market," he said. "Employers are going to have to increase wages and benefits.