How has the expiry of supplementary unemployment benefits affected the employment rate?

The September employment report was released on Friday and, as it did, in August, well below expectations and offered other evidence suggesting that the US economic recovery is slowing.

Overall fair 194,000 new pays were added in September according to the Bureau of Labor Statistics. In addition, the labor force, the number of people employed and actively looking for work, fell by 183,000, suggesting that some were starting to lose confidence in the hope of finding a job.

The September employment report is the first major proof of the effect that the additional unemployment benefits had on unemployment in the United States and undermines claims that the increased support was hampering employment numbers.

How have additional unemployment benefits affected unemployment?

Since the start of the pandemic, the federal government has offered additional unemployment benefits to unemployed Americans to supplement state-funded programs. Typically, states would only offer about 26 weeks of unemployment assistance and with millions of people long-term unemployed due to covid-19 restrictions, it was decided that additional support was needed.

However, in the summer of 2021, a number of predominantly Republican-led states argued that the additional payments were an incentive to find jobs and decided to cut federal programs sooner than expected. At September 6 Extra unemployment assistance has expired across the country, but early evidence shows no real sign of increasing employment.

Data from the Bureau of Labor Statistics showed that the US labor market added 962,000 new jobs in June; 1.1 million in July; and 366,000 in August. From this perspective, the 194,000 additional jobs created in September seem rather disappointing and suggest that the additional unemployment benefits did not deter people a return to work.

Report echoes findings that UB did not hinder employment

As of June, 26 states, 25 of which were headed by a Republican governor, elected to withdraw from supplemental unemployment assistance programs before the Labor Day expiration date set by President Joe Biden. Many of them claimed that the increased benefits fueled a labor shortage, but many studies rejected this suggestion.

The New York Times reports that states that withdrew from the supplemental program prematurely “have found, at most, a modest increase in employment.” On average in these states, each unemployed person lost about $ 278 per week in benefits due to the change, but won only $ 14 in earnings.

“The idea was that there were a lot of jobs – it was just that people weren’t looking. That was the narrative, ”said Arindrajit Dube, an economist at the University of Massachusetts. “I don’t think this story holds.

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