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Early termination of unemployment benefits may not have the desired effect

Frederick J. Brown | AFP | Getty Images

New analysis suggests that job hunting has been curtailed in 12 states that have opted out of the federal unemployment program in recent weeks, suggesting that policies may not be working as planned.

The state has terminated its pandemic-era profits (including an additional $ 300 a week) since June 12, about three months before the expiration of September 6.

They were the first of a total of 25 states, all headed by the Governor of the Republican Party, and withdrew from the program to encourage recipients to look for jobs in record jobs.

The governor argues that generous profits stay home and provide incentives that make it difficult for businesses to hire. Critics say benefits do not have a significant impact on workers’ decisions, and that cuts in funds do harm to the economy by reducing household spending.

However, workers in 12 states that have already cut federal aid are looking for less vibrant jobs than in other regions, according to an analysis released by job site Indeed on Tuesday.

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Indeed, according to economist Anne Elizabeth Conkel, this is the opposite dynamics given the policy intent to terminate benefits early.

“People in these states are less likely to be searching than your average job seeker right now,” she said.

Job searches are about 4% below the national average for Alaska, Iowa, Mississippi, and Missouri, which ended their benefits on June 12, according to Indeed data.

Activity ended on June 19, 1% lower in eight states: Alabama, Idaho, Indiana, Nebraska, New Hampshire, North Dakota, West Virginia and Wyoming.

“You’ll think they’re searching more,” Conkel said. “At least for now, this supports the idea that federal unemployment allowances are the main reason for labor market friction.”

The data measured by job click clicks could shift in the coming weeks, she said.

According to Michael Strain, director of economic policy research at the American Enterprise Institute, a right-wing think tank, it’s hard to say for sure how enhanced profits are affecting the labor market.

But the labor market is likely to have recovered to the point where $ 300 a week supplements are having a negative impact, he said.

“The challenge for public policy is to balance the good and the bad,” Strain said.

“In June 2021, my view is that the generous unemployment benefits we offer are doing more harm to workers and the economy as a whole than they are doing good. That’s it, “he added.

$ 300 a week

The unemployment allowance usually replaces about half of the worker’s pre-dismissal wage.

Congress raised $ 600 a week in the early days of the Covid Pandemic. Parliamentarians also funded groups that are not normally eligible for state benefits, such as long-term unemployed, self-employed and gig workers.

Since then, they have cut their weekly grants in half (to $ 300 a week) and made federal benefits available throughout Labor Day.

The University of Chicago economist Peter Ganon estimates that the additional $ 300 will pay about 42% of the beneficiaries the same or higher wages than before. (These are mainly low-wage workers.)

“It’s a bad economic deal to get a job for most of the workforce,” Strain said.

Labor participation was relatively flat, and he said he was concerned, especially due to the record number of jobs in April.

However, economists point out reasons other than the benefits to labor market dynamics.

For one thing, Covid’s health concerns are likely to cause some people to stay home, they said.

Highly contagious Covid variants account for a larger proportion of cases in the United States, with only 56% of adults in the United States being fully vaccinated against Covid-19. The Biden administration said Tuesday that it may not be able to meet its goal of vaccination of 70% of adults by July 4.

Childcare can continue to be a challenge for families. If day care remains completely closed, the school has not resumed face-to-face learning or the summer camp is not fully functioning.

Resuming the economy (and its associated job acquisition) is not as easy as switching it on, according to economists.

“I don’t think it’s the whole puzzle,” Conkel said of the enhanced benefits. “I think it’s part of the puzzle.”

Some question the concept of labor shortage.

“If a company offers only high prices and bad services, no one says it’s a” customer shortage, “” Bharat Ramamurti, deputy director of the National Economic Council, said in a tweet. “But if a company offers only low wages and bad profits, some say it’s a” labor shortage. ” “

The Federal Reserve Bank of San Francisco estimated that the $ 300 supplement had a “small but likely noticeable” impact on job hunting and worker availability in early 2021.

Predictions are that if seven out of 28 unemployed people receive a job that they normally accept, one in seven will decline the job at an additional $ 300 a week.

Beyond $ 300, most Republican states have also completed pandemic unemployment assistance for self-employed and gig workers earlier than planned. These workers are completely losing their profits.

“I don’t think it’s right from a policy standpoint to eliminate these workers,” Strain said.

Instead, he said, the eligibility for these benefits would gradually become more stringent and workers should be notified.

Early termination of unemployment benefits may not have the desired effect

Source link Early termination of unemployment benefits may not have the desired effect

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