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Cutting UI benefits is probably getting people back to work

Published on 27 Comments on Cutting UI benefits is probably getting people back to work

About half of all states—almost all of them Republican—cut off extended unemployment benefits in June. Nearly all blue states, by contrast, are keeping the extended benefits in place until they expire in September.

In theory, cutting off the benefits early should motivate people to go out and get a job. But does it? The Wall Street Journal took a look at the state-by-state change in the unemployment rate in June and came up with this:

What does this mean? Unemployment went up in the red states, but it hardly seems likely that the imminent cutoff of UI benefits would cause a bunch of working folks to abruptly quit their jobs.

More likely, I think, is that in the red states a lot of people suddenly started looking for jobs, which makes them officially part of the workforce. However, they haven't found new jobs yet, so they contribute to the official unemployment rate going up. In the blue states, workers are still waiting. And since they aren't actively looking for jobs, they aren't counted as unemployed.

That's my guess, anyway. We won't know for sure until a few months have passed. But no one should be surprised if cutting off UI benefits pushes people to get back in the workforce and start looking for jobs. It may or may not be good policy to force people into jobs fast, fast, fast, but it makes sense that cutting off benefits would have that effect. Employers, naturally, are thrilled.

27 thoughts on “Cutting UI benefits is probably getting people back to work”

  1. bbleh

    And let us keep in mind that what is really important here are the incentives that UI creates and the message it sends. Let's not get distracted by all this noisy nonsense about people being thrown out of their homes, or forgoing medications because they need the money for food, or the immediate criminogenic effects of poverty, or its long-term effects on childhood development, or ... any of that bleeding-heart stuff.

    I mean, one thing the richest nation in the world absolutely cannot do is support its poorest citizens during a crisis that was entirely beyond their control. Think of the message that would send!

      1. bbleh

        Sadly no, it's that some criminals are poor people in desperate straits driven to desperate actions.

        And of course, some criminals -- such as The Former Guy and very many of his business associates -- have every advantage in the world -- inherited wealth, privileged upbringing, talents sufficient to enable them to make their way in the world -- and yet criminals they are.

        Who is more culpable?

          1. bbleh

            No, Trump's criminality is Trump's fault -- really, entirely, 100% his fault. The criminality of other people, and the causes of poverty, are unfortunately much more complex.

  2. MikeCA

    Paul Krugman was asked if he expected to see an effect on state economies depending on whether they ended UI early or not. He said no. There is just too much noise caused by difference in local economies to see any effect.

    1. jakejjj

      Would this be the same Paul Krugman who predicted a stock crash after Trump kicked the Hildebeast? Word to the wise: If you're going to cite an economist, cite one who isn't a hack. LOL

  4. Nellie

    I don’t know. You have to say you’re looking for work when you’re on unemployment, even if you aren’t. Why would anyone answer differently on the BLS Survey?

  5. jakejjj

    By the way, just who's "forcing" anyone into jobs? If you are a "progressive" who hates work, you can loot stores, sell narcotics, or turn tricks. Shouldn't be all that unfamiliar. LOL

  6. Spadesofgrey

    There is more to PUA data than a extra 300 a week. Some of it is business owners getting cash payouts and keeping their employees. When that ends, LFPR is going to rocket upwards on BLS data.

  7. illilillili

    1) It's the wall street journal, so can we actually believe the results?
    2) It's a 0.1% difference. Are you kidding me?

  8. WryCooder

    Hang on a second, Kevin. Only those collecting UI benefits would be affected by ending the extra $300/wk funded by the federal government. Those collecting UI are de facto counted as being unemployed, yes? If you're not currently looking for work AND not collecting unemployment, why would the end of the add'l $300 be an incentive to look for work? Something seems wonky here.

  9. azumbrunn

    The title says: "Cutting UI benefits is probably getting people back to work"

    The text says: Cutting UI benefits makes people who are in fact unemployed (though they are not counted as such) OFFICIALLY unemployed, but they can not find any damn job (if they could unemployment would not rise, would it?).

    Good job, red states, good job, Kevin.

  10. mistermeyer

    Or... it's just the noise of an atypical recession followed by an atypical recovery, neither of which follows traditional rules. I guess the fact that there's no penalty for being wrong leads so many people to rush forth with instant interpretations of preliminary data despite the fact that the subject begs for an in-depth analysis.

    Although, TBH, I suppose the threat of starvation and eviction will lead you to accept the first dead-end starvation-wage job you can find, there to be stuck until you either drop dead from exhaustion and old age or simply die inside and fulfill your duties in a zombie-like fashion until you finally become old enough to collect whatever the Republicans leave of Social Security.

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