Commentary, COVID-19, News

New Yale study debunks GOP claim that enhanced unemployment benefits discourage work

As you’ve probably heard by now, among the arguments being advanced by Republicans in Washington as they work to reduce the amount of money the federal government is providing to jobless workers in the form of enhanced unemployment insurance benefits, is that the $600 weekly benefit that many workers have received is a disincentive to their returning to work.

Earlier this month, NBC News reported that Senate Majority Leader Mitch McConnell referred to the enhanced unemployment payments as creating a situation in which we “pay people a bonus not to go back to work.” McConnell went on to state that “we’re hearing it all over the country that it’s made it harder actually to get people back to work.”

In the weeks since, multiple analysts have debunked McConnell’s claim by noting that there simply aren’t enough jobs for people to go back to in the current environment. This from a July 15 CNBC report entitled “Here’s why economists say arguments against extending unemployment benefits don’t hold up”:

“It’s not that people don’t want to return to work because they are receiving more money to sit back and do nothing. Rather, jobs just aren’t available yet, Beth Akers, a former staff economist on Council of Economic Advisors under former President George W. Bush, told CNBC.”

But don’t just take Akers’s word for it. If you still harbor any doubts about the matter, check out a new report from Yale University researchers. This is fromYale News story published yesterday entitled “Yale study finds expanded jobless benefits did not reduce employment”:

A new report by Yale economists finds no evidence that the enhanced jobless benefits Congress authorized in March in response to the COVID-19 pandemic reduced employment.

The report (PDF) addresses concerns that the more generous unemployment benefits, which provide $600 per week above state unemployment insurance payments, would disincentivize work.

The researchers assessed this claim using weekly data from Homebase, a company that provides scheduling and timesheet software to small businesses throughout the United States. The findings suggest that, in the aggregate, the expanded benefits neither encouraged layoffs during the pandemic’s onset nor deterred people from returning to work once businesses began reopening.

The enhanced unemployment benefits were initiated under the CARES Act, a $2.2 trillion economic stimulus package enacted on March 27 that attempted to ease the pandemic’s severe economic consequences. The expanded benefits, which are set to expire July 31, provide a $600 weekly payment in addition to any state unemployment insurance. The supplemental payment was designed to cover 100% of the average U.S. wage when combined with existing unemployment benefits. The generosity of an individual’s unemployment benefits depends on several factors, including their earnings history and their state’s schedule of benefits.

The report found that workers receiving larger increases in unemployment benefits experienced very similar gains in employment by early May relative to workers with less-generous benefit increases. People with more generously expanded benefits also resumed working at a similar or slightly quicker rate than others did, according to the report.

The data do not show a relationship between benefit generosity and employment paths after the CARES Act, which could be due to the collapse of labor demand during the COVID-19 crisis,” said Joseph Altonji, the Thomas DeWitt Cuyler Professor of Economics in the Faculty of Arts and Sciences, and a co-author of the report.

Click here to read the rest of the article and here to read the report itself. One can only hope Mitch McConnell will do so.

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