Early termination of unemployment benefits may not have the desired effect
Frederick J. Brown | AFP | Getty Images
New analysis suggests that job searches have been curtailed in 12 states that have pulled out of the federal unemployment program in recent weeks, suggesting policies may not work as expected.
The state ended its pandemic era benefits (including an additional $ 300 per week) since June 12, about three months before the September 6 expiration.
They were the first of a total of 25 states, all led by the governor of the Republican Party, and withdrew from the program to encourage recipients to seek jobs in record jobs.
The governor argues that the generous profits stay at home and offer incentives that make it difficult for companies to hire. Critics say benefits do not have a significant impact on workers’ decisions, and cuts to funds hurt the economy by reducing household spending.
However, workers in 12 states that have already cut federal aid are looking for less dynamic jobs than in other regions, according to an analysis released Tuesday by the employment site Indeed.
Other articles on personal finance:
Are you worried about inflation? Certificates of deposit may not be the answer
Families can now opt out of monthly child tax credits
He is 75 years old and faces deportation
Indeed, according to economist Anne Elizabeth Conkel, this is the opposite dynamic given the policy’s intention to terminate benefits early.
“People in these states are less likely to search than your average job seeker right now,” she said.
Job searches are about 4% lower than the national average for Alaska, Iowa, Mississippi and Missouri, which ended their benefits on June 12, according to data from Indeed.
Activity ended on June 19, down 1% in eight states: Alabama, Idaho, Indiana, Nebraska, New Hampshire, North Dakota, West Virginia and Wyoming.
“You will think they are looking for more,” said Conkel. “At least for now, it supports the idea that federal unemployment benefits are the main reason for friction in the labor market.”
The data measured by clicks on job postings could change in the coming weeks, she said.
According to Michael Strain, director of economic policy research at the American Enterprise Institute, a right-wing think tank, it’s hard to say for sure how rising profits are affecting the job market.
But the job market has likely recovered to the point where supplements of $ 300 per week are having a negative impact, he said.
“The challenge for public policy is to balance right and wrong,” Strain said.
“In June 2021, I believe that the generous unemployment benefits we are offering are doing more harm to workers and the economy as a whole than they are doing good. That’s all, ”he added.
$ 300 per week
Unemployment benefit usually replaces around half of the salary before the worker is dismissed.
Congress raised $ 600 per week at the start of the Covid pandemic. Parliamentarians have also funded groups that are not normally eligible for state benefits, such as the long-term unemployed, the self-employed and concert workers.
Since then, they’ve cut their weekly grants in half (to $ 300 per week) and made federal benefits available throughout Labor Day.
University of Chicago economist Peter Ganon estimates that the additional $ 300 will pay about 42% of beneficiaries the same or more salary than before. (They are mostly low-paid workers.)
“It’s a bad economic deal to get a job for most of the workforce,” Strain said.
Labor force participation was relatively stable and he expressed concern, especially given the record number of jobs in April.
However, economists point to reasons other than the benefits for labor market dynamics.
On the one hand, the health concerns of Covid are likely to cause some people to stay at home, they said.
Highly contagious Covid variants account for a greater proportion of cases in the United States, with only 56% of adults in the United States fully vaccinated against Covid-19. The Biden administration said on Tuesday it may not be able to meet its goal of vaccinating 70% of adults by July 4.
Child care can continue to be a challenge for families. If the daycare remains completely closed, the school has not resumed face-to-face learning or the summer camp is not fully functioning.
Recovering the economy (and the acquisition of jobs associated with it) is not as simple as restarting it, economists say.
“I don’t think that’s the whole puzzle,” Conkel said of the enhanced benefits. “I think that’s part of the puzzle.
Some question the concept of a labor shortage.
“If a company only offers high prices and bad service, no one is saying it’s a ‘customer shortage’,” Bharat Ramamurti, deputy director of the National Economic Council, said in a tweet. “But if a company offers only low wages and bad profits, some say it is a ‘labor shortage’. “”
The Federal Reserve Bank of San Francisco estimated the $ 300 supplement had a “slight but likely noticeable” impact on job search and worker availability in early 2021.
The predictions are that if seven out of 28 unemployed people get a job they normally take, one in seven will turn down the job at an extra $ 300 per week.
Beyond $ 300, most Republican states also completed pandemic unemployment assistance for the self-employed and concert workers earlier than expected. These workers completely lose their profits.
“I don’t think it’s politically fair to eliminate these workers,” Strain said.
Instead, he said, eligibility for these benefits would gradually become stricter and workers should be informed.
Source link Early termination of unemployment benefits may not have the desired effect