Coronavirus unemployment bump did not hurt job market, study finds
Researchers say the extra $600 served as an important source of relief
National Economic Council Director Larry Kudlow discusses the possibility of additional stimulus, Joe Biden’s plans to raise taxes and how the Trump administration has rebuilt the U.S. economy.
Concerns that expanded unemployment benefits discouraged workers from seeking out new employment may be overblown, new research shows.
The additional $600 had “little to no adverse effect” on the job search, according to a study published by the Federal Reserve Board of San Francisco, which looked at recent labor market data.
Researchers Nicolas Petrosky-Nadeau and Robert G. Valletta explained that the value of a job – and a regular paycheck – outweighed the value of increased, short-term unemployment benefits.
The only exception, they said, was for people in food services, who can make around $460 per week.
CORONAVIRUS UNEMPLOYMENT BUMP IS ‘INCOME EXPANSION,’ PAYS THESE WORKERS MORE THAN THEIR JOBS
Those findings come despite the fact that the benefits paid some workers more than their previous employment.
A study by three researchers at the University of Chicago found that benefits for 68% of workers would exceed earnings. Additionally, the median replacement rate for about 20% of people was 134%.
However, in analyzing labor data, Petrosky-Nadeau and Valletta also found that individuals in states with the highest unemployment benefits tended to find and accept jobs more rapidly.
“Our findings emphasize that UI benefits instead served as an important source of economic relief and stimulus,” researchers wrote. “With infrequent job offers and supplemental UI payments being only temporary, job seekers do not have the luxury to be choosy and delay accepting a job in favor of continuing to receive benefits.”
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Under the CARES Act, eligible Americans who were out of work entirely or underemployed because of reasons related to coronavirus were eligible to receive an additional $600 a week for up to four months. That policy expired in July.
President Trump signed an executive order in August to allow states to provide up to an extra $400 on top of regular state benefits to help support unemployed individuals. Known as the Lost Wages Assistance program, it does require states to supply one-quarter of the cost. But in some states, governors may opt to put regularly scheduled benefits toward the funding, which means workers would only receive an extra $300.
Residents in some states are already receiving this benefit.
Meanwhile, lawmakers have been unable to agree on terms for an additional stimulus package.
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