Cutting unemployment benefits won’t bring workers back – but hurt millions of families, new research finds
A GOP-led push to cut financial support for the unemployed could cause millions of Americans to lose their unemployment benefits, according to a new report.
Following a disappointing jobs report in April, which showed only 266,000 new jobs had been created, even with a record 8.1 million job vacancies in the economy, 22 states – all with Republican governors – have announced plans to cut an additional $ 300. weekly unemployment benefit payments before the scheduled end of the program in September.
An analysis released this week by Oxford Economics paints a grim picture of the results of these actions: a total of around 3.5 million workers will lose this additional funding. Since most of these states also plan to halt other expanded unemployment programs triggered by a pandemic for concert workers and those who have exhausted regular state benefits, an estimated 2.5 million people would lose. full access to unemployment benefits. The impact would be in the order of $ 8 billion per month for the remainder of the benefit expansion.
Governors cutting those programs ahead of the Sept. 6 expiration date said they were doing so because businesses in their states are struggling to find workers. Labor economists reject this line of thinking, challenging the idea that about $ 1,200 per month is enough of an incentive to keep people at home in the face of lingering barriers to health and care.
“Yes, it has marginal impacts, but people think childcare responsibilities and Covid reluctance have a bigger effect,” said Jeff Strohl, research director at Georgetown University Center on Education and the Workforce.
Andrew Stettner, senior researcher at the Century Foundation, said the combination of intermittent schools and daycare centers has made it more difficult for parents not only to plan a return to the workforce, but also to embark on the job market. looking for a new job in the first place.
âChildcare capacity has been reduced and people are still getting used to their new reality,â he said.
A growing body of research has shown that unemployment benefits have little or no impact on motivating people to look for work.
Contrary to claims by lawmakers, a growing body of research has found that unemployment benefits have little or no impact on motivating people to look for work.
A widely cited study conducted by the Federal Reserve Bank of Chicago last summer found that, rather than discouraging unemployed workers, unemployment benefits prompted them to seek even more jobs. “Those who are currently receiving unemployment insurance benefits are intensely looking for a new job, and their efforts appear to be somewhat greater than those unemployed not receiving benefits,” the researchers wrote.
February study of the University of Chicago found that not only did more generous unemployment benefits not reduce people’s propensity to look for work, they also generated unexpected increases in spending among these households. “These spending and job search facts suggest that expanding benefits during the pandemic was a more effective policy than standard structural models predicted,” the study authors wrote.
But with a cut in unemployment benefits, Stettner predicted that economic activity in those states would drop. âIt’s going to slow down the recovery, especially in some of the hardest hit areas with high unemployment rates – that’s where it’s going to hurt the most. These benefits have been really significant, âhe said.
The unique nature of the job losses triggered by a pandemic has made it more difficult to measure and predict the continued job recovery. âWe’re not talking about a traditional skills gap,â Strohl said. âThere is still a huge churn rate. âWe are talking about a labor shortage, but not a skills shortage,â he said.
Stettner suggested that wages and working conditions could contribute to the reluctance of less skilled workers to accept certain types of work. “The problem is the quality of the jobs that become available – this often happens at the start of a recovery,” he said. âWe’re obviously at an inflection point – a lot of people are hiring at the same time. “