The end of the emergency federal $300 weekly unemployment benefit is unlikely to drive large numbers of workers back into the labor market, several studies by economists and the Financial Times have found.
About 7.5 million potential workers were impacted when the COVID-era weekly subsidy ended on the 6 September federal cutoff date, the FT said.
Twenty-six states already had ended the program in June, July, or August for their residents, hoping to push them back to work.
From May, when most of those states announced they would end the program early, through August, states that curtailed the benefit and those that kept it both saw jobs added at a rate of about 1.3 percent, according to U.S. labor department figures.
The view that federal unemployment benefits was the only major barrier to bringing people back to work is “misguided,” Gregory Daco, chief U.S. economist at Oxford Economics, said to the FT.
“It was one factor but not the only one,” he said.
From May through August, unemployment did fall slightly faster in states that ended federal benefits early, Indeed’s chief economist Jed Kolko told the FT, but that was matched by the additional jobs created in states that kept the federal checks coming.
A study by Columbia University researchers of 18,000 low-wage workers receiving unemployment payments found that 26 percent of those in the study took jobs in states where the federal benefit was cut off early, compared to 22 percent in states that kept it.
For most of 2020, the federal bonus was set at $600 a week for unemployed workers and self-employed people who lost gigs. The money was in addition to state unemployment checks.
The federal top-up channeled $850 billion into the U.S. economy from March 2020 through August 2021, according to investment firm Evercore.
The U.S. economy welcomed back about one million workers in each of June and July, still leaving about 5.5 million out of work.
Because the early end to federal jobless support in half the states failed to drive workers back into the labor force, the problem of persistent unemployment is rooted more deeply, economists told the FT.
Nearly three million women left the labor force during the COVID War and 1.8 million are still jobless, labor department figures show.
Many are staying home to supervise children learning remotely or out of fear of the Delta virus.
Others, including many men, have reevaluated their low-wage, dead-end jobs and have returned to school or are seeking more meaningful work.
The impact of almost 5.5 million jobless workers suddenly losing $300 a week lays the foundation of a different kind of study, the FT noted.
“The expiry of these benefits could end up doing more damage for families’ finances than good for their employment situation,” Daco said.
TREND FORECAST: What the COVID War has done—with much of society locked down and out of work—it gave people lots of time to assess who they are and what they are doing with their lives. And what millions saw was a bleak picture.
Now, with the Big’s in control of the economy and no room to move up the corporate or small business ladder, many would rather not work at all than work at a job that pays $15 an hour or less, that will take them nowhere.
Thus, we forecast that unemployment numbers will remain high and hiring difficulties will persist. And, with more companies mandating and/or requiring employees to be vaccinated, this too will add to the job gap.