As Jobless Benefits End, Study Paints Complex Picture

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13%

The Balance

That’s how many unemployed people are likely to find work once the federal government’s pandemic unemployment benefits expire next month, according to new academic research that suggests limited job gains won’t outweigh the economic toll from decreased income and spending.

The wisdom of the government’s extra pandemic-era unemployment benefits has come under increased scrutiny in recent months as record numbers of job openings suggest the temporary benefits—in some cases estimated to amount to more money than they would have earned working—may be a disincentive for some to return to work. The new research by economists and professors at universities including Columbia and Harvard is the latest to examine just how much of an impact the benefits have had.

Using paycheck and benefits data from a financial services provider called Earnin, the researchers compared individual employment, income, and spending levels in 19 of the 22 states that withdrew from federal benefit programs in June against those in 23 states that planned to participate until the programs expire on Sept. 6.

The study found the chances of getting a job in the first 19 states were in fact higher, but noted that still only 13% of those who lost unemployment benefits because of their state’s early cutoff found jobs by the first week of August. That, the researchers said, led to a major discrepancy between average unemployment benefits and increased earnings, and overall, spending among the study group fell by an average of $145 a week.

Extrapolating from those estimates, researchers theorized that half a million people may find jobs in September and October, but most of the 4 million people who will lose benefits may take much longer, potentially cutting back their spending by $8 billion.

The federal government’s pandemic unemployment programs have provided an additional $300 per week over regular state benefits and covered more people (including the self-employed) and for longer periods than regular state benefits would. On Thursday President Joe Biden said these programs would indeed expire on Sept. 6, as scheduled, but gave states the option to use federal funding they were allocated through the American Rescue Plan to continue paying some benefits, excluding the $300 supplement.

Have a question, comment, or story to share? You can reach Helen at hreis@thebalance.com.