Did Cutting Funds Get Americans Back To Work
As legal battles over enhanced unemployment benefits continue in states including Ohio, Oklahoma and Texas, economists say its too early to tell whether the GOP argument that ending the payments early will get Americans back to work more quickly and help to fill labor shortages holds up.
The Labor Departments June jobs report found 850,000 new jobs were added largely before federal benefits were cut. That shows steady growth, contrary to claims that enhanced unemployment was keeping people home, said Andrew Stettner, a senior fellow at The Century Foundation, a progressive, non-partisan think tank.
The number of unemployment beneficiaries in states that cut the extra $300 a week in federal benefits, according to a June 27 analysis by The Wall Street Journal. However, Stettner noted, unemployment was already on the decline in many of these states anyway, and initial claims have also gone up in some states that discontinued the payments, such as Texas. Looking at the last two weeks of unemployment data, he said, I dont see clear evidence that taking the benefits away is getting people back to work.
A recent study conducted by Indeed found that unemployment benefits were among a number of factors keeping some people from going back to work, but they fell below COVID fears and child care as the most common reasons people gave for putting their job search on the backburner.
Less Income Less Spending
Average impact of ending federal programs on weekly unemployment benefits, earnings and spending, among people who were on unemployment in late April.
Notes: Data is as of Aug. 6 and includes 19 states that have cut off benefits.
The labor market didnt pop after you kicked these people off, said Michael Stepner, a University of Toronto economist who was another of the studys authors. Most of these people are not finding jobs, and its going to take them a long time to get their earnings back.
The Labor Department data that was released Friday told a similar story. The five states experiencing the fastest job growth in July Vermont, Hawaii, North Carolina, Rhode Island and Alaska have all retained at least some of the federal benefits.
Overall, states that have ended some or all of the benefits have experienced slightly slower job growth since April than states that have continued the benefits, although economists cautioned that the data was volatile and that the benefits were only one of many ways that the states differed from one another.
Further complicating the picture, states cut off different sets of benefits at different times, and in several states court challenges delayed or are continuing to delay the end of the programs. Still, the data suggests that ending the benefits has not led to a surge in job growth.
Coral Murphy Marcos contributed reporting.
Workers: Finding A Job Is Not Easy
Unemployed workers have told CBS MoneyWatch it’s not as easy as their governors suggest. Some workers are struggling with health issues tied to the pandemic, while others have children who are in remote school or are now at home for the summer.
One former hotel manager in New Hampshire said she was making less on unemployment than she did in her prior job, which she lost when the pandemic shut down hotels last year. She also noted that the available jobs in New Hampshire were “all low-paying,” such as positions at Walmart or Ace Hardware.
Ruzicka, who started a petition asking Nebraska Governor Pete Ricketts to reconsider his early termination of benefits, said he thinks he might need another month or two to find a job but his bills won’t wait.
“Why is my governor trying to say he knows better than Congress?” he said. “This is going to devastate many, many people.”
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We Must Continue To Support Our Workers
Aid to the unemployed has been the linchpin of the nations response to the economic damage of the pandemic. American workers deserve support until the economy has turned the corner and public health and child care conditions have fully turned around. The decisions these states have taken are deeply misguided, and no other states should follow suit.
Notes
Fact Sheet: Whats At Stake As States Cancel Federal Unemployment Benefits
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Andrew Stettner
Senior Fellow
On May 4, 2021, Montana Governor Greg Gianforte announced that his state was backing out of federal pandemic unemployment benefits, including the $300 per week supplement , Pandemic Unemployment Assistance for gig workers and others not eligible for UI, and Pandemic Emergency Unemployment Compensation for the long-term unemployed. Governors from South Carolina, Alabama, Alaska, Arizona, Iowa, Indiana, Idaho, Georgia, Missouri, Ohio, Wyoming, Mississippi, Arkansas, South Dakota, Tennessee, Utah, West Virginia and North Dakota quickly followed suit and more could follow. This fact sheet outlines the damage that these governors will inflict upon their most vulnerable populations and their economy by making this rash decision, and the potential harm to the recovery if more of the nations governors were to take a similar step.
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Why End The Payments Early
Currently, all of the programs are set to last through September 6, 2021 as part of the American Rescue Plan and are funded by the federal government. But many Republican governors say that the enhanced benefits are keeping people from going back to work.
“Employers are telling me one of the big reasons they cannot recruit and retain some workers is because those employees are receiving more on unemployment than they would while working,” Idaho Governor Brad Little said in a statement. “My decision is based on a fundamental conservative principle we do not want people on unemployment. We want people working.”
But the move to cut federal unemployment benefits seems “tied to politics, not economics,” the economic research team at JPMorgan Chase wrote in a research note this week. The benefits are likely causing some people to stay home, but overall are not a major factor in the unemployment rate.
Research throughout the pandemic also found that “major changes in pandemic unemployment compensation, first from $600 to $300 in September, and then from $0 to $300 in January, had little impact either way on job finding rates,”writes Andrew Stettner, senior fellow at the Century Foundation.
Stettner writes that cutting the benefits early also fails to recognize that the money is typically spent by the workers, meaning it goes right back into the local economy and supports small businesses.
Correction: This article has been updated to clarify that the benefits in Utah end June 26.
Unemployed In One Of These Four States You Lose Your Federal Benefits This Weekend
On June 12, unemployed workers in Alaska, Iowa, Missouri and Mississippi will see their pandemic unemployment benefits shut off three months early, the first of 25 Republican-led states to slash federal benefits that would ordinarily expire in September.
Its the beginning of a bold, mass, social and economic experiment to see if turning off federal unemployment benefits early for half the country will prod people in those states back to work.
The Coronavirus Aid, Relief, and Economic Security Act in March 2020 provided a $300 weekly federal supplement on top of regular state unemployment benefits. The American Rescue Plan extended them through Labor Day.
The Century Foundation, a progressive think tank, estimates that 4 million people will lose benefits, for a total of $22 billion.
Economists and researchers say the move will only nudge a small amount of people back into the workforce, and will not outweigh the precariousness for workers relying on benefits for basic needs and who are staying home for other reasons, like virus concerns and caregiving for elderly relatives or children.
But the other GOP-led 21 states are forging ahead, turning off their federal benefits through July 19 to heed business complaints that employers cant find enough workers to serve tables, make beds, and man factory equipment. They say the government is paying people more not to work than they could afford to pay them to work, and they cant compete.
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Why Did Benefits End Early In So Many States
Citing labor shortages in the spring, 26 state governors claimed pandemic-related unemployment benefits were producing limited incentives for workers to take jobs. Many economists and analysts disagreed, highlighting several factors that prevented people from finding suitable work, including low wages, lack of health care, inadequate child care and fear of contracting COVID-19.
With unemployment claims still fluctuating as the economy struggles to return to pre-pandemic “normalcy,” reports are showing that the early cancellation of the federal programs had little impact on labor markets. A recent JP Morgan Chase Institute study confirmed that states that ended supplemental unemployment insurance programs during the summer saw a limited impact on job growth.
According to an August report by the Century Foundation’s Andrew Stettner, “Politics, not economics, drove the attack on unemployment insurance.” The states that cut off the enhanced benefits before the federal expiration were mostly Republican-led.
Arkansas, Indiana and Maryland were slated to cut off benefits early, but successful lawsuits forced those states to preserve the federal coverage, at least temporarily. In issuing their rulings, judges noted that the ending of benefits made it harder for the unemployed to afford basic needs. Lawsuits were also filed against state governors elsewhere, which were either denied by judges or are still held up in the courts.
A Small Rise In Employment
Note: Chart reflects data in 19 states that have cut off benefits, and 23 that have retained them.
But far more people did not find jobs. The researchers had data for 19 states that ended the programs in those places, they found that about 1.1 million people lost benefits because of the cutoff, and that only about 145,000 of them found jobs.
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States That Scaled Back Unemployment Aid Have Seen A Decline In Teen Employment And An Increase In Workers Over 25 Early Evidence Finds
The 20 Republican-led states that reduced unemployment benefits in June did not see animmediate spike in overall hiring, but early evidence suggests something did change: The teen hiring boom slowed in those states, and workers 25 and older returned to work more quickly.
A new analysis by payroll processor Gusto, provided to The Washington Post, found that small restaurants and hospitality businesses in states such as Missouri, which ended the extra unemployment benefits early, saw a jump in hiring of workers over age 25. The uptick in hiring of older workers was roughly offset by the slower hiring of teens in these states. In contrast, restaurants and hospitality businesses in states such as Kansas, where the full benefits remain, have been hiring a lot more teenagers who are less experienced and less likely to qualify for unemployment aid.
The findings suggest hiring is likely to remain difficult for some time, especially in the lower-paying hospitality sector. The analysis also adds perspective to the teen hiring boom, revealing that more generous unemployment payments played a role in keeping more experienced workers on the sidelines, forcing employers to turn to younger workers. It indicates teen hiring could slow further in September, as unemployment benefits are reduced across the country and young people return to school.
Weve definitely lowered that minimum age, said Weiss, a part owner of 715 who has worked there since it opened in 2009.
State Unemployment Insurance Benefits
The state unemployment insurance benefit program will remain in place. Under state law, these benefits currently provide eligible claimants with up to 13 weeks of benefits in a one-year period, with a maximum benefit of $350 a week.
To be eligible for state unemployment insurance benefits:
- You must be unemployed due to no fault of your own. The Division of Employment Security will make this determination based on information provided by you and your last employer.
- You must have earned sufficient wages in employment that was subject to unemployment insurance tax.
- You must be physically able and available to work.
- You must be actively seeking work, and you must register for work with NCWorks.gov or your resident state’s job service office.
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Democrats Committed To Keeping Benefits Through September But Skeptical Beyond
Democrats have parried the Republican charge, arguing that there are myriad other reasons for labor shortages outside the $300 a week benefits. President Biden cited three main reasons child care constraints, school and daycare closures, and fears of contracting Covid-19 as the main causes of the labor shortage. Treasury Secretary Janet Yellen offered similar sentiments, saying she didnt think the major factor is the extra unemployment.” She pointed to the same issues as Biden as well as supply chain bottlenecks as the key drivers. For example, many companies like automakers and construction firms are contending with clogged supply chains, which has forced them to slow production and pull back on hiring.
Half Of Us States Ended Enhanced Unemployment Insurance Payments Early Ahead Of Nationwide Termination Of Benefits For Millions Of People
States that ended enhanced federal unemployment benefits early have so far seen about the same job growth as states that continued offering the pandemic-related extra aid, according to a Wall Street Journal analysis and economists.
Several rounds of federal pandemic aid boosted the amount of unemployment payments, most recently by $300 a week, and extended them for as long as 18 months. The extra benefits are set to expire nationwide next week. But 25 states ended the financial enhancement over the summer, and most of them also moved to end other pandemic-specific unemployment programs such as benefits for gig and self-employed workers.
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Help Wanted: Where Are The Workers
But research shows that most people who lose their benefits don’t find jobs right away.
About two dozen states ended the federal jobless aid earlier this summer in hopes that would drive many more people back to work. But despite a record number of job openings, it didn’t. Unemployed people in states that cut benefits early were only slightly more likely to find jobs than those in states that kept paying.
“There wasn’t a huge difference in the rate at which they returned to work,” said economist Michael Stepner of the University of Toronto, who was part of a team that conducted the research. “There was a huge difference in the amount of benefits these workers received and the amount of money that they spent in their local economy.”
Is It Too Late To Apply For Unemployment Insurance
If you’ve been laid off or furloughed, you can apply for unemployment benefits in your state. Once the state approves your claim, you can apply to receive whatever state benefits you’re entitled to. Because states cover 30% to 50% of a person’s wages, there isn’t a single sum you could expect on a national basis. Each state’s unemployment insurance office provides information to file a claim with the program in the state where you worked. Some claims may be filed in person, by phone or online, so it’s best to contact your state’s office directly.
Eligibility criteria vary from state to state, but the general rule is that you should apply if you’ve lost your job or been laid off through no fault of your own, including if it was due directly or indirectly to the pandemic. You can check on your state’s requirements here. In February, the Department of Labor updated its unemployment eligibility requirements to include people who refused to return to work due to unsafe coronavirus standards.
As for self-employed workers and freelancers who are losing PUA coverage, some online groups are calling to extend pandemic unemployment programs through the crisis and offer more information.
You might also want to know about the IRS issuing refunds to those who were taxed on their 2020 unemployment benefits. And here’s an important primer on the 2021 enhanced child tax credit, which is offering millions of families extra money in advance of next year’s taxes.
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Us States Ending Federal Unemployment Benefit Saw No Clear Job Gains
A “Now Hiring” sign advertising jobs at a hand car wash is seen along a street in Miami, Florida, U.S. May 8, 2020. REUTERS/Marco Bello/File Photo
WASHINGTON, July 20 – U.S. states putting an early end to federal unemployment benefits saw a larger jump in local labor supply in June than those planning to maintain the $300 weekly supplement until early September, new data show, though there was no clear sign ithad led to significantly more hiring.
State-level jobs data released earlier this month show that in the 26 states stopping benefits early an additional 174,000 people joined the labor force in June, by either taking jobs or beginning work searches, compared to 47,000 in the other states.
While that may indicate the withdrawal of benefits is having some of the impact intended by the governors who cut off the stipend, and causing more people to seek employment, the numbers are small in a national labor force of 161 million and come with a cautionary note: Job gains in both groups of states were roughly the same.
That could be the result of lagging data, since the survey that produces national and state job estimates ended its June round before the benefits actually ran out in most of the states planning to end them early.
Goldman Sachs economists also found little evidence yet that the cessation of benefits across a group of mostly Republican-led states was having much impact on labor markets that continue to puzzle Federal Reserve and other officials.
