Ending unemployment benefits early isn't juicing jobs

·2 min read

Data: Axios research; Cartogram: Axios Visuals

More than half of states are embarking on a grand experiment: prematurely ending enhanced unemployment benefits in order to spur people back to work.

What's happening: Despite the uproar over the higher payouts, early evidence suggests canceling them only marginally helped employers find workers — that is, if there was any effect at all.

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  • State-level data analyzed by Reuters show that job gains in states that cut off benefits and those that didn't were roughly the same.

  • A study by JPMorgan Chase Institute found that supplemental unemployment benefits "played a small role in deterring jobless workers from finding a new job."

  • Payroll processor Gusto found that job growth among service-sector small businesses in states that snipped weekly benefits was about the same as those that didn't.

Catch up quick: 26 states — all but one led by a Republican — have moved to stop paying out the extra $300 in unemployment benefits ahead of the September cutoff. Some also ended special programs that allowed gig workers to receive benefits.

  • Of note: Maryland, Indiana and Arkansas have to keep paying them out while lawsuits make their way through the court system.

One view from the ground: "I do think there's evidence that as the federal stimulus rolls off, that you'll see an improvement in the application rate," McDonald's CEO Chris Kempczinski told investors this week.

  • Kempczinski said the company has seen a surge in job applications overall, but more so in states that have cut off benefits early.

The bottom line: Economists say increased unemployment benefits alone aren’t holding back the job market.

  • Rather they are helping keep the finances of would-be workers — at home because of lack of child care, fear of the virus or simply being choosier about where to work — afloat.

  • "People are shopping carefully for their next job. But, generally speaking, Americans want to work. And they'll find their way into the jobs that they want," Fed Chairman Jerome Powell told reporters earlier this week.

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