"No uptick in employment" in states ending pandemic benefits

Census survey data indicates that there was “no uptick in employment” in the twelve states that cut residents off from federal pandemic-related unemployment benefits in mid-June. However, residents of those states were more likely to report it was “somewhat difficult” or “very difficult” to pay for usual household expenses, compared to surveys conducted before the unemployment programs ended. 

Arindrajit Dube, an economics professor at UMass Amherst, published his findings on July 18.

Iowa was among the first four states that ended their participation in federal unemployment programs created during the COVID-19 pandemic. Governor Kim Reynolds claimed the extra benefits were “discouraging people from returning to work.” Business lobby groups and many GOP elected officials cheered her decision. Tens of thousands of Iowans had been collecting benefits totaling more than $30 million per week through the three federal programs that became unavailable on June 12.

The chief economist for the online jobs site Indeed reported in late June that in “the share of national job search activity” was “below the late April baseline” in twelve states that pulled out of the pandemic unemployment programs on June 12 or June 19. That analysis was based on “clicks on job postings,” not individual reports on their circumstances.

In contrast Dube reviewed the most recent U.S. Census Bureau Household Pulse Survey, which included data collected through July 5. He used the survey because it “asks whether the respondent received UI [unemployment insurance] in the last 7 days, which allows us to assess the impact of the policy expiration,” and “also asks whether the respondent is currently working, which allows us to evaluate the employment impacts.”

Not surprisingly, the share of population receiving unemployment “fell sharply” (by about 60 percent) in states that cut off the federal programs on June 12 or June 19. In states where residents can still collect pandemic-related unemployment, the share of population receiving benefits “remained largely unchanged” in early July.

Reynolds declared in May, “it’s time for everyone who can to get back to work. This country needs to look to the future, and Iowa intends to lead the way.” How did that work out?

Dube didn’t review Iowa’s survey data in isolation, but in the twelve states that were first to exit the federal programs, the employment to population rates of people between the ages of 18 and 65 “saw no uptick in employment.”

“Certainly there was no immediate boost to employment during the 2-3 weeks following the expiration of the pandemic UI benefits,” Dube wrote. On the contrary, the employment to population rates “in these states declined by around 1.4 percentage points” between early June and early July.

The census survey also showed that in states where pandemic unemployment ended, more people had trouble covering basic needs. Dube concluded,

Overall, the mid-June expirations of pandemic UI seem to have sharply reduced the share of population receiving any unemployment benefits. But this doesn’t seem to have translated into most of these individuals having jobs in the first 2-3 weeks following expiration. However, there is evidence that the reduced UI benefits increased self-reported hardship in paying for regular expenses. Of course, this evidence is still early, and more data is needed to paint a fuller picture.

Speaking to CNBC about his findings, Dube noted, “The hardship numbers shouldn’t really change much if it were easy to transition and get another job.”

Although Reynolds and other Republicans have implied that it’s easy for any Iowan to get a job, given the number of unfilled positions, unemployed people have spoken publicly about barriers keeping them out of the workforce, such as low wages and lack of affordable child care.

JPMorgan researchers Peter B McCrory and Jesse Edgerton wrote in early July that there’s “little sign of any differential improvement in unemployment claims or in several spending and activity measures” in states that pulled out of pandemic-related unemployment programs.

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