People didn't rush back to work when their unemployment benefits were cut early, a new study finds, despite what some GOP governors predicted
Arizona Governor Doug Ducey cut state unemployment benefits in the state on July 10th. Ralph Freso / Getty Images
A new study found that employment fell slightly in the states that cut federal unemployment benefits early.
Some GOP governors have blamed unemployment benefits for sluggish employment growth.
The study analyzed survey data from the US Census Bureau between April and July.
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In some states that cut unemployment insurance (UI) prematurely, people did not return to work immediately, a new analysis found.
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In the twelve states that cut performance on either June 12 or June 19, employment was largely unchanged in the weeks thereafter, according to Arindrajit Dube, an economics professor at the University of Massachusetts Amherst, during an analysis of data from the US Census Bureau noted.
"Certainly there was no immediate job boost in the 2-3 weeks after the UI benefits for the pandemic ran out," said Dube.
Twenty-six states, led primarily by Republican governors, have announced - or have already cut - the $ 300 weekly federal government increase for unemployed Americans ahead of its scheduled September 6 expiration. Dube's analysis focused on the impact of the $ 300 cut, as well as states cutting other UI programs for pandemics.
The cut in unemployment insurance was followed by a slight decrease in the proportion of the population receiving benefits - but Dube found that the proportion of employees in these states also decreased slightly over the same period.
The employment share rose 0.2 percentage points in states where benefits were still available, he said.
Dube told Insider that "while the number of people receiving unemployment benefits fell significantly - and the number of people who said they had trouble paying their bills - increased significantly - that didn't seem to translate, at least in the short term," to an increase in overall employment rates. "
Read more: Cutting unemployment benefits isn't just a terrible economic idea - it's a cruel blow to millions of Americans
Dube's study used the latest Household Pulse Survey (HPS), which collected employment data from 18- to 65-year-olds for the period April 14 through July 5. The HPS asked respondents whether they had received a UI in the past seven days and whether they are currently employed.
Some governors and corporations blamed unemployment benefits for the sluggish growth in recruitment, saying the money had slowed economic growth.
Arizona Governor Doug Ducey, who cut all state UI programs in the state on July 10, said in a May press release that he would “use federal funds to encourage people to work ... rather than pay people to do them not working".
Dube's results suggest that the withdrawal of subsidies has not led to an employment boom, at least in the short term. We'll have to wait longer to understand the full implications of the cuts, he said.
Dube's analysis is backed by a June Indeed study that found overall job search activity has declined in states that cut benefits prematurely.
But the evidence is mixed: Data released in July by the Bureau of Labor Statistics showed that 13 of the 15 states that have employment rates closest to pre-pandemic levels have prematurely cut state unemployment benefits by $ 300 had.
The number of initial jobless claims rose unexpectedly to 419,000 in the week ending July 17, 51,000 more than the previous week, despite a general downward trend, according to Labor Department figures.
And even if it affects people's willingness to get a job right away, that's not necessarily a bad thing. It takes a lot of people a little longer to find an ideal match or position, Dube told Insider.
"This is possibly a really good thing that could help these workers, but it could also improve productivity levels in the economy as a whole."
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Economist at the National Bureau of Economic Research (NBER) and the University of Massachusetts
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