There is little evidence that the end of extra unemployment has brought people back to work

A person reads a list of employers while attending a job fair at SoFi Stadium in Inglewood, CA on September 9, 2021.

Patrick T. Fallon | AFP | Getty Images

According to economists, there is little evidence that the state has succeeded in getting people back to work by ending federal unemployment benefits early.

Twenty-six states withdrew their pandemic-era unemployment support in June or July. Their governor, primarily Republicans, believed that enhanced unemployment assistance provided motivation to stay home instead of work.

According to economists, the data suggest that other factors play a greater role. Among the many issues that set workers aside in record jobs, they list ongoing health concerns, childcare issues, and increased savings.

In the remaining states, the federal benefit program officially ended on Labor Day. The “cliff of unemployment” affected more than 8.5 million people and lost all profits, the Ministry of Labor data released Thursday suggests.

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Workers’ modest reaction to the first unemployment cliff (that is, states withdrawing early) suggests that the end of Labor Day will not cause a surge in employment, according to economists.

“If it’s a precursor, I’m not betting on the end of federal interests [on Labor Day] It’s a really clear and sharp inflection point. “

She said the state’s history is different (for example, in terms of work composition and worker demographics), making it difficult to compare and predict.

“Immediate problem”

Understanding how unemployment cliffs affect the U.S. labor market is an “imminent problem,” according to a JPMorgan Chase Bank research note published Thursday and written by economist Peter McCrory. ..

For example, people who can’t find a job or get back to work can struggle financially, regain their spending, and probably have a negative impact on the local economy.

Most people who lost federal aid in June (7 in 8) will be back by early August, according to a paper written by researchers at Columbia University, Harvard University, University of Massachusetts Amherst, and the University of Toronto last month. I wasn’t hired. As a result, we found that total spending was reduced by nearly $ 2 billion.

JP Morgan economists also “could not find a significant impact” on employment in early withdrawal countries since mid-June, McCulley wrote. He looked at data such as monthly state employment indicators and weekly billing for unemployment benefits, as well as alternatives such as restaurant meals and Google’s job search.

“In fact, we’ve found that lost benefits are associated with increased employment, increased earnings, and a slight decline in workforce participation,” McCulley wrote.

Workers’ floods in the employment market have not yet materialized in these states, according to Daniel Jao, but the impact is similar in states where federal benefits ended on September 6. It’s too early to understand if it will be. Senior economist at Glassdoor on site. (September 6 was the official expiration date provided by the American Rescue Plan, which Congress did not extend.)

There is reason to believe that the impact may be more pronounced in the other half of the state, he said. For one thing, Labor Day cliffs (which affected big states like California and New York) affected more workers than summer workers, and probably the impact of work on available data. He said it was easier to find.

However, Covid Delta variants (and the surge in related cases) can make the unemployed nervous and employers struggling to find recruitment jobs, especially for face-to-face jobs. Yes, the economist said. Increased caseloads can also affect parents’ ability to return to work, including school closures and student quarantine.

According to Zhao, Americans are still only increasing their savings, probably due to increased benefits, allowing the unemployed to spend more time finding the best jobs. (Reducing other government assistance and face-to-face activities may also have helped boost savings during a pandemic.)

There is little evidence that the end of extra unemployment has brought people back to work

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