Making Cuts to Unemployment Benefits do not Encourage Jobs telling Report states
About half of states cut federal unemployment benefits in June or July 2021, a few months ahead of their scheduled expiration...
Many people believe the cure to eliminating the excess individuals collecting unemployment is to lower the benefits provided by the programs. When states would make these cuts to pandemic unemployment benefits last summer, the action had a small impact on hiring according to a recent report.
The federal government threw all they could to enhance the safety net for the jobless in March 2020. Hundreds of dollars in additional weekly benefits to individuals were paid out and they gave aid to millions of previously ineligible people, like gig workers and the self-employed.
Governors of roughly half the states withdrew federal benefits in June or July 2021 which is a few months before their scheduled expiration nationwide on September 6. The debate at the time centered on what was seen as the likelihood that the benefit boost was contributing to employers’ hiring challenges.
The officials in favor of cutting the benefits believed federal assistance kept people from looking for work, while others argued that factors like ongoing pandemic health risks and family-care duties played a bigger role in the job crunch.
An in-depth analysis by researchers at the Fed in San Francisco found states that eliminated the benefits early didn’t experience the intended effect of boosting a big increase in jobs. It compared hiring rates from July to September 2021 in the states that ended benefits with those that kept them intact.
Hiring picked up a measly 0.2% in the studied states compared to the benefit-keeping states. The small increase was recorded while considering states’ average monthly hiring rates of about 4%-5%. Ultimately, if the state were to maintain federal benefits, it would have a 4.5% hiring rate compared to a state that cut them and experienced a hiring rate of 4.7%.