Cutting off unemployment benefits early is not pushing people to find work, data suggests
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Congress raised weekly aid by $600 in the early days of the Covid pandemic. Lawmakers also gave funds to the long-term unemployed and groups like the self-employed and gig workers who are typically ineligible for state benefits.
Job hunting has been muted in 12 states that opted out of federal unemployment programs in recent weeks, suggesting the policy may not be working as planned, according to a new analysis by job site Indeed.
The states ended the pandemic-era benefits — including an extra $300 a week — about three months ahead of their Sept. 6 expiration.
Job searches are about 4% below the national average in Alaska, Iowa, Mississippi and Missouri, which stopped paying the federal benefits as of June 12, according to the analysis published Tuesday.
Activity is 1% lower in eight states — Alabama, Idaho, Indiana, Nebraska, New Hampshire, North Dakota, West Virginia and Wyoming — that ended them June 19.
They’re the first among a total of 25 states, all led by Republican governors, withdrawing from federal unemployment programs to encourage recipients to look for work amid record job openings.
But the Indeed data — which measures clicks on job posts — suggests the opposite dynamic of what one would expect, given the policy intent of ending benefits early, according to Indeed economist AnnElizabeth Konkel.
“People in those states are less likely to be searching than your average jobseeker right now,” she said.
Generous benefits offer an incentive to stay home and make it difficult for businesses to hire, the governors claim. Critics say benefits aren’t having a large effect on worker decisions and that curtailing funds will harm the economy by cutting household spending.
“You’d think they’d be searching more,” Konkel said. “At least right now, this does push back on the idea that federal unemployment benefits are the main reason there are labor market frictions.”
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