State cuts to pandemic unemployment benefits last summer had a small impact on hiring, suggesting enhanced funding for the unemployed didn’t play a big role in labor shortages, according to a recent report.
The federal government greatly expanded the social safety net for the jobless in March 2020. It offered hundreds of dollars in additional weekly benefits to individuals and gave aid to millions of previously ineligible people, like gig workers and the self-employed.
Governors of roughly half the states, most of them Republican, withdrew federal benefits in June or July 2021 — a few months before their scheduled expiration nationwide on Sept. 6. The debate at the time centered on what was seen as the likelihood that the benefit boost was contributing to employers’ hiring challenges.Some officials believed federal assistance kept people from looking for work, while others argued that factors like ongoing pandemic health risks and family-care duties (kids home from school, for example) played a bigger role in the job crunch.
But an analysis by researchers at the Federal Reserve Bank of San Francisco found states that withdrew benefits early didn’t experience the intended effect of spurring a big increase in jobs. It compared hiring rates from July to September 2021 in the states that ended benefits with those that kept them intact.
