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Early end of federal unemployment benefits does not put people to work

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Job seekers speak to recruiters at a Job News USA career fair in Louisville, Ky. On June 23, 2021.

Luke Sharrett / Bloomberg via Getty Images

About half of U.S. states withdrew federal funds early for months of unemployment to encourage unemployed residents to find employment. But growing evidence shows that the political gamble has yet to bear fruit.

Twenty-six states have announced plans to end federal benefits related to the pandemic starting in May. They officially pulled out in waves in June and July.

UKG, a payroll and time management company, found that changes among hourly workers in these states increased at about half the rate than states that continued to benefit from the reverse trend of what on might expect.

Specifically, in states that ended benefits, shifts increased 2.2% from May to July; they increased by 4.1% in the others which kept federal aid intact, according to the UKG analysis.

“Unemployment benefits were not the thing that kept people from going to work,” said Dave Gilbertson, UKG vice president. “There are other elements, especially in their personal life, which make it very difficult to return to work.”

It doesn’t appear that differences between state economies or labor markets influenced the dichotomy, as the two groups were experiencing similar growth earlier this year, Gilbertson said.

Likewise, employment fell 0.9% in states that ended federal benefits between mid-June and mid-July, but increased 2.3% in states that maintained them, according to The data posted this week by Homebase, another payroll and time management company.

The analysis looked at the percentage change in the number of employees working from April 2021.

UKG and Homebase figures are early indicators. It will likely take another month or two of employment data and other labor market data before economists can further assess the effectiveness of state policies, they say.

“It’s an early vision, there’s no question about it,” Gilbertson said. “It takes a while for people to be able to reorganize their personal lives to start a new job.

“But I think that’s a pretty strong directional indicator.”

The high frequency data is consistent with other recent analyzes.

Indeed economists, using proprietary job search data, and Arindrajit Dube, professor of economics at the University of Massachusetts Amherst, who studied recent survey data released by the US Census Bureau, did also found no evidence that state policies were pushing people back to work.

“[Data] suggest that there is no clear evidence that [unemployment] leaving the programs early resulted in a significant increase in job growth or job search, ”said Nick Bunker, director of economic research for North America at Indeed Hiring Lab.

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2/ https://www.cnbc.com/2021/08/04/early-end-to-federal-unemployment-pay-in-26-states-not-getting-people-to-work.html

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