Economists and policymakers are paying close attention to employment trends in 25 states that prematurely prevented jobless Americans from collecting an extra $300 a week in unemployment benefits.
The growing consensus from early reports is that hiring in states that ended the benefits wasn’t vastly different from states that kept them, suggesting that the decision to return to work is a product of other factors.
The governors in these states, which include Texas, Ohio and Florida, held that the extra benefits were keeping unemployed people from applying to new jobs as employers complain of labor shortages.
States that didn’t cut off workers from benefits saw a larger uptick in the hiring of 15- to 19-year-olds compared to states that announced they were ending benefits.
Americans outside of the 25 states can continue to collect the $300 a week benefit through early September, per the American Rescue Plan.
But a new report suggests that hiring was in fact higher in the states that ended the benefits — but only for Americans 25 years or older within service-sector small businesses.
The report, published by Gusto, a payroll management company, analyzed data from more than 100,000 small businesses.
When the first 12 states announced they were ending benefits in early May, hiring skyrocketed for workers 25 or older compared to states that chose not to end them, according to the report. But as the official mid-June cutoff date approached hiring slowed down.
“Ending enhanced unemployment insurance provisions is likely not the silver bullet to speeding up this economic recovery,” said Luke Pardue, an economist at Gusto.
States that didn’t cut off workers from benefits saw a larger uptick in the hiring of 15- to 19-year-olds over the same period of time compared to states that announced they were ending benefits.
That age group typically doesn’t qualify for unemployment benefits, as most are full-time students. Therefore their decision to work, for the most part, is not impacted by changes in unemployment benefits.
“The growth in hiring of older workers has been driven by re-hiring around the announcement dates, and has also been driven by the states that have the highest adult vaccination rates in this group,” Pardue added.
‘A reasonable interpretation of these findings is that there was a segment of workers for whom it was easy to return to work—and they did so the week governors announced the end of these benefits’
“Given these patterns, a reasonable interpretation of these findings is that there was a segment of workers for whom it was easy to return to work — and they did so the week governors announced the end of these benefits.”
“Policymakers would be better-served by focusing on achieving higher vaccination rates and ensuring schools and child-care centers can re-open in a safe and timely manner,” Pardue said.
Indeed, child-care duties is the top reason more than 7.5 million adults said they weren’t working, according to a June 23 to July 5 U.S. Census Household Pulse survey.
Currently, some 9.5 million people in the U.S. are unemployed but there are some 9.2 million job openings, according to the Bureau of Labor Statistics.