States that cut off unemployment aid haven’t seen an employment boom


In May, Missouri Governor Michael Parson instructed the state to cut $ 300 in weekly unemployment payments about three months before federal-funded benefits expire in September. I explained that there is. “Excessive” aid “motivated people to move away from the workforce,” he said.

However, based on a new analysis of recruitment data from Gusto, a company that handles salaries and other services for small businesses, the person’s plan to strengthen recruitment by reducing unemployment allowances may not be successful. There is sex.

So far, Gusto’s analysis found that the 12 states that first reduced the pandemic unemployment allowance experienced employment growth comparable to that of the states that maintained the federal allowance. These 12 states, with Republican governors, have blamed generous unemployment benefits by staying on the sidelines of workers, but early evidence suggests that there are other issues, from pandemic health issues to childcare issues. Gusto economist Luke Pardu said it could weigh heavily on the job market.

“These benefits [were] Although terminated early to accelerate economic growth, the data show that the policy did not have its intended effect, “Paldu said.

“After all, these governors are keeping in mind that they will produce a longer-term and sustainable recovery, and ending unemployment insurance is not a silver bullet if a quick recovery is needed,” he adds. I did.

Employers since April 2021 in 12 states (Alabama, Alaska, Idaho, Indiana, Iowa, Mississippi, Missouri, Nebraska, New Hampshire, North Dakota, West Virginia, Wyoming) that have completed unemployment assistance by June 19. The number increased by 11.6%. By comparison, Gusto’s analysis found that in profitable states, employment is growing at a relatively similar rate, 11.2%.

Indeed, the analysis only tracks a few weeks after the end of last month’s unemployment allowance. Nonetheless, early data show that the strategy did not immediately have the impact the governors of those states wanted.

Vaccination boosts employment

Among the 12 states that discontinued early aid, Gusto has the highest number of jobs between high-vaccination states (Alaska, Iowa, New Hampshire, North Dakota, West Virginia, Wyoming) and low-vaccination states. I found a difference. Studies have shown that almost all employment growth occurred in six states with high vaccination rates after the states announced that they would end unemployment assistance.

This is a potentially more prevalent problem in states such as Missouri, where vaccination rates are below the national average, people’s concerns about health and fear of becoming infected with COVID-19. It suggests that it is affecting employment. According to state and federal data, only about 41% of Missouri people are fully vaccinated, compared to about 50% across the United States.

Therefore, countries that want to increase employment “would be much better off with higher vaccination rates” than to cut off unemployment assistance, Pardu said.

With the proliferation of new strains such as delta variants, workers’ concerns about returning to the workforce may increase, especially in areas with low vaccination rates. As the number of cases of COVID-19 increases, restrictions such as mask mandates have been reinstated in some areas, and some major companies such as Apple are delaying their return to the office.

Increasing difficulty

Gusto’s findings were reflected by a study by the University of Massachusetts economist Arindrajit Dube. According to Dube’s analysis, the 12 states whose aid was discontinued by June 19 saw a 60% reduction in unemployment program enrollment, but no change in the employment-to-population ratio. In other words, employment growth was not immediately boosted in these states.

Nonetheless, Dube has discovered one important impact of early expiration of benefits in the labor market: increasing difficulty. According to Dube’s analysis of Census Bureau data, more people with early cutoffs reported that bill payments became increasingly difficult the previous week.

This is the experience of former Uber driver Kristen Adkins, 36, who was cut off from unemployment aid in Texas on June 26th. Adkins said her financial situation, which was already volatile before the end of aid, is now even worse. She was homeless before the early end of unemployment assistance, but now she can’t rent as many hotel rooms as she wants and sometimes sleeps under the bridge.

Adkins said he had applied for more than 100 jobs since the aid was over, but feels that the stigma of being homeless has hurt her chances of finding a job. She said one potential employer told her: “So basically, what you’re telling me is that you’re homeless. You can’t hire someone without proper hygiene.”

“Domino effect”

“It’s a domino effect,” Adkins said of losing unemployment benefits. She said, “I would have a roof overhead and be more stable. I know I can pay for the buses around the town.”

So far, Adkins has received some support through food stamps and hopes that a loan to a small business will be made for her. She wants to resume the business of transporting dogs to rescue teams and breeders across the country, but she needs money to get a car as her last car was pandemic back.

Adkins told Texas Governor Greg Abbott: Where are you helping someone when you’re robbing everything? “

States that cut off unemployment aid haven’t seen an employment boom

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