Did ending coronavirus pandemic unemployment programs early help states reduce unemployment? That was the hope, but a new report shows that the results were mixed.
Just 12.5% of workers who lost some or all of their jobless benefits in the 19 states that ended unemployment programs in June found new work by August 6, according to research by economists. Around 24% of the workers who were unemployed in April found jobs by July in states that opted out of the programs- while 21.5% found jobs in states that kept the unemployment benefits in tact.
Yahoo Money reports that the states that canceled enhanced unemployment benefits saw a $4 billion reduction in unemployment payments, but also saw a $2 billion drop in consumer spending. The new earnings that came in only represented 7% of that lost consumer spending.
Altogether 26 states cut off the extra $300 in weekly benefits before the federal expiration, while 22 also canceled the Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) programs.
However, early cancelation did not result in significant job growth.
To make matters worse, as the benefits expire in the coming weeks- spending is expected to drop by $8 billion during September and October.
The economists who put the paper together say that it ultimately comes down to weighing the benefit of drop-off in economic consumption, against the cost of continuing them.
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