Why cutting unemployment benefits led to money worries, not job gains
Yahoo Finance's Denitsa Tsekova breaks down how eliminating unemployment benefits impacted citizens.
Video Transcript
- We want to bring in Denitsa Tsekova for a little bit more on this indeed. So what did this study find?
DENITSA TSEKOVA: So yeah, the study looks at the first 12 states that opted out of the program. This is the states that opted out on June 12 and June 19. And the expiration there didn't really translate into job gains. Unfortunately, it did translate into an increase in financial hardship.
So the study looks at the employment-to-population ratio, or the number of people that are employed against the working age population. And in some of the states, not only that ratio didn't increase, but it actually decreased. While compared to the states that stayed in the program, the employment-to-population ratio there actually increased.
And going back to that argument that canceling the unemployment benefits will lead people back to their jobs or finding new ones, so far, what we're seeing is that this is not the case. Of course, it's important to say that this is really early evidence. This is the first 2 to 3 weeks, even though the announcements were actually made in May.
When it comes to financial hardship, a greater number of people are saying that they find it very difficult or somewhat difficult to cover their expenses in those 12 states, while in the rest of the country where the unemployment benefits continue to be distributed, that number is much lower. And people are experiencing less financial difficulty. As a reminder, a total of 26 states are opting out of the programs.
This affects four million workers. And they're losing either a fraction of their benefits, but for many, this is their full benefits. So it's a really significant impact on their monthly income.
- So Denitsa, we know that there are workers suing the states that are opting out of the programs. Any of these suits successful?
DENITSA TSEKOVA: Yeah. So, so far, there have been seven lawsuits. And we have two successful. The first successful one was in Indiana. The second one is in Maryland.
And benefits in those states are actually reinstated. And workers are getting them. The latest lawsuits was in Tennessee. That happened yesterday. And we're looking at and covering if there are more. And we'll report back.
