States cutting unemployment benefits didn’t get people back to work, study finds

State withdrawals from pandemic-era unemployment programs aren’t speeding up the job recovery, according to a new analysis.

Twenty-five states have ended their participation in at least some of the programs since mid-June. Louisiana, will do so July 31.

Those measures offered aid to the long-term unemployed, gig and other workers ineligible for traditional state benefits and raised pay by $300 a week.

State governors, largely Republicans, said the federal funds were keeping recipients from looking for jobs, making it harder for businesses to hire and holding back the economic recovery.

However, Census Bureau data suggests recipients didn’t rush to find jobs in the weeks following the first batch of state withdrawals, according to Arindrajit Dube, an economics professor at the University of Massachusetts Amherst.

Specifically, the share of adults receiving unemployment benefits fell sharply (by 2.2 percentage points) in the dozen states that cut federal funding on June 12 or 19, according to Dube. That translates to a 60% reduction in unemployment rolls in those states, he said.

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But there wasn’t a corresponding increase in employment among this group — in fact, the share of adults with a job fell by 1.4 percentage points over the same period, according to Dube. (Employment rose by 0.2 percentage points in states that didn’t end the pandemic benefits.)

Together, the data shows there wasn’t an immediate job boost following the cuts, Dube said. However, more time and information are needed to analyze the longer-term effects of state policies, he said.

“There’s not early evidence [federal benefits] were a big constraint [on jobs],” according to Susan Houseman, research director at the W.E. Upjohn Institute for Employment Research, who reviewed the findings.

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