Tag Archives: supplemental unemployment benefits

Elections Matter In Economics

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Townhall posted an article today about the economic recovery in America after the coronavirus.

The article reports:

The U.S. economy added 850,000 jobs in June while the unemployment rate rose to 5.9 percent according to the latest data released Friday morning from the Department of Labor’s Bureau of Labor Statistics. 

Among the industries with the most notable growth — as more states lift restrictions put in place due to the Wuhan coronavirus — were leisure and hospitality, public and private education, and professional and business services.

The article notes the impact of the increased unemployment benefits:

The stronger-than-expected job growth is due in part to states that have ended expanded or extended federal unemployment benefits that often incentivized citizens to stay out of the workforce. As the Wall Street Journal noted recently, the number of Americans taking unemployment benefits is “falling at a faster rate in Missouri and 21 other states canceling enhanced and extended payments this month, suggesting that ending the aid could push more people to take jobs.”

As June’s employment data demonstrates, ending the extended benefits did push more people to enter the workforce because, for some, it was no longer more financially beneficial to avoid returning to work. 

The article concludes:

These states, unsurprisingly, are almost all led by Republicans. Even Politico noted that, when it comes to the 15 states that have already returned to pre-Wuhan coronavirus economic activity, “12 are led by Republican governors.” On the flip side, “the 10 states reporting the lowest levels of activity since January 2020, seven — including New York, Pennsylvania, and Illinois — are run by Democratic governors.”

The data from these states, along with today’s jobs report for June, suggest conservative leadership and policies are a significant predictor of a strong economic recovery.

The Republican National Committee recently heralded the economic growth in GOP-led states based on Labor Department data that found 18 of the top 20 states for jobs recovered since COVID hit have Republican-controlled legislatures, as do 17 of the 20 states with the lowest unemployment. 

The workforce participation rate is unchanged from May–it is holding at 61.6 percent.

What An Incredible Coincidence!

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Yesterday The Epoch Times reported that job searches in 22 Republican-led states jumped 5 percent on the day those states announced that they were ending the government’s supplemental unemployment benefits. What a coincidence!

The article reports:

Job searches jumped by 5 percent in 22 Republican-led states on the day each announced it was moving to end the Biden administration’s pandemic unemployment benefit boost, a Thursday analysis shows, suggesting a link between the jobless compensation top-up and peoples’ interest in looking for a job.

While the analysis, authored by Jed Kolko, Chief Economist at the Indeed Hiring Lab, notes that the increase in job searches was “temporary, vanishing by the eighth day after the announcement,” it may be viewed as an arrow in the quiver of those who contend that generous unemployment benefits are creating a disincentive for people to take up jobs.

“It is, of course, still unclear how this temporary boost in search activity will affect hiring or wages,” Kolko wrote in the analysis. “And the premature end of these benefits in June and July could well have a different effect on search activity, hiring, and wages than these announcements in May did,” he added.

A possible factor as to why the effect faded quickly is media buzz around the date of the announcement, as well as the opt-outs of the supplemental federal unemployment programs are not due to come into force until June or July. Kolko told the Washington Examiner that there could be a jump in job searches when the benefits actually expire.

I think it’s time some common sense wandered into this discussion. If I can make more money staying home than working, I am going to stay home. If I have to prove that I am looking for a job in order to collect increased benefits, I will probably look for a job. If I can simply sit home and watch television and collect increased benefits, I will do that. Human nature is pretty obvious here–would I rather stay home in my pj’s and get paid or would I rather get up, shower, and go to work only to be paid less? Seems pretty clear.