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* CNBC…
States that withdrew early from federal unemployment programs pushed few people back to work and fueled a nearly $2 billion cut in household spending, potentially hurting their local economies, according to new research.
Twenty-six state governors — all Republican, except one — opted out of the pandemic-era programs several weeks before their official expiration on Labor Day. Enhanced benefits were keeping the unemployed from looking for jobs and fueling a labor shortage, they claimed.
That bet seems to have had a limited payoff so far, according to a paper authored by economists and researchers at Columbia University, Harvard University, the University of Massachusetts Amherst and the University of Toronto. […]
States that ended federal benefits early saw larger job gains among the unemployed: Their employment jumped 4.4 percentage points relative to jobless individuals in states that kept benefits flowing, according to the paper, which analyzes data through the first week of August.
However, that translates to just 1 in 8 unemployed individuals in the “cutoff states” who found a job in that time period. The majority, 7 out of 8, didn’t find a new job. [Emphasis added.]
Illinois did not reduce benefits.
Thoughts?
posted by Rich Miller
Wednesday, Aug 25, 21 @ 3:15 am
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I am not sure what to think. Are 5he help wanted signs only for low paying entry jobs? The widget factory is constantly looking for workers. Decent job. Not great. But new hires literally never make it thru their probation period.
Comment by Blue Dog Wednesday, Aug 25, 21 @ 3:48 am
=== States that withdrew early from federal unemployment programs pushed few people back to work and fueled a nearly $2 billion cut in household spending, potentially hurting their local economies ===
But welfare queens living high off the gub’mint teat need to be forced back to work, pulling themselves up by their own bootstraps. If the economy suffers because they remain unemployed even after the requisite pain is applied, well, that just means we need more pain, not recognize that the increased unemployment benefits weren’t the reason that the unemployed were unemployed in then first place. Besides the above-mentioned analyses were tainted by bamboo statistics from deep red communist China.
Comment by PublicServant Wednesday, Aug 25, 21 @ 5:36 am
=== States that withdrew early from federal unemployment programs pushed few people back to work and fueled a nearly $2 billion cut in household spending, potentially hurting their local economies ===
I’m sure those states that cut off the extra benefits will acknowledge the error of their decision when soberly considering these statistics. /s
Comment by PublicServant Wednesday, Aug 25, 21 @ 6:20 am
The enhanced benefits weren’t “keeping the unemployed from looking for jobs and fueling a labor shortage.” The enhanced benefits were keeping people afloat during a global crisis. People that lacked child care, or were providing caring for elderly family, or suffered from conditions that would have made COVID a death sentence.
Comment by Sangamo Girl Wednesday, Aug 25, 21 @ 6:56 am
“benefits were keeping the unemployed from looking for jobs and fueling a labor shortage, they claimed”
Another lie, like trickle down economics? Color us surprised. The cruelty is the point, as they say, with Republicans and right wingers: giving corporations and the wealthiest the lion’s share of tax cuts while slashing the poorest. Republican Christianity. Republicans know they can keep doing this because many of their voters hurt themselves to hurt the people they don’t like.
Comment by Grandson of Man Wednesday, Aug 25, 21 @ 7:32 am
“Are the help wanted signs only for low paying entry jobs?”
No. They are for 50K starting careers with benefits and bonus packages.
Maybe we should send a mine rescue crew in there to find your head.
Comment by Flyin' Elvis'-Utah Chapter Wednesday, Aug 25, 21 @ 7:32 am
A grim reminder that the only thing that Republicans are worse at than legal theory is economic theory.
The Republican Party are not the only ones to blame, however.
A host of business groups also called for ending the unemployment benefits. Democrats should applaud the groups who refrained from chasing the bait, and publicly shame those who misled us once again.
Anyone recall where Illinois’ business lobby stood? I can only assume the Illinois Chamber was in lockstep with Rodney Davis.
Comment by Thomas Paine Wednesday, Aug 25, 21 @ 7:39 am
=Are 5he help wanted signs only for low paying entry jobs?=
I’ve been helping my recently widowed friend apply for jobs and we’ve yet to find any that offer more than 25-30 hours a week (likely to keep from having to offer benefits), and almost all want completely open availability which means you can’t string together two part time jobs.
Sitting with her and doing the math on the childcare and transportation costs she’d have to take on to accept any of these positions was really eye opening.
Comment by tea_and_honey Wednesday, Aug 25, 21 @ 7:44 am
Has the federal govt decided how the states were going to pick up the increases in unemployment insurance?
Comment by Blue Dog Wednesday, Aug 25, 21 @ 7:49 am
It’s nice when governors allow their states to be used as control groups in social research. That’s the only way one can gain objective data on the effectiveness of social policy. Similar experiments are currently underway in the fields of public health, environmental science, and more.
Comment by Dysfunction Junction Wednesday, Aug 25, 21 @ 8:15 am
But facebook told me that all the lazy bums would be forced back to work. They were wrong?
Comment by Bruce( no not him) Wednesday, Aug 25, 21 @ 8:20 am
If you believe the unemployed are a unified blob of people shirking their social responsibilities this must be very confusing. If you have the imagination to come up with or the empathy to listen to people telling you why people might not be able to go to work, this was all very predictable. Cutting off unemployment doesn’t provide care for a sick loved one, doesn’t create a childcare solution, doesn’t address workplace safety, why would it create employment?
Comment by SWIL_Voter Wednesday, Aug 25, 21 @ 8:26 am
Insufficient data to draw a conclusion.
For those who received the enhanced unemployment benefit, it started in April 2020. The fixed extra $600 per week (later reduced to $300) was a one size fits all solution that really didn’t fit the circumstances. In some places, mainly the two coats and major metropolitan areas across the country, it was barely enough to get by on. In other areas, downstate Illinois for example, it could easily be more money than they made when working (and still some didn’t pay their mortgage or rent … but that’s another rant).
That’s a year plus to get in the habit of living only on unemployment. As noted above, circumstances will vary, but it will take time to break the habit of extra government money; some never will and will fall through the cracks.
While at the macro level it kept the country from falling into a major recession, I don’t expect to be able to look back and evaluate the overall impact of the policies at more finite levels until 4 or 5 years from now.
Comment by RNUG Wednesday, Aug 25, 21 @ 8:34 am
If it’s between an entry level job and unemployment, you take the entry level job, at least that’s what an honest person does.
Comment by My Corona Wednesday, Aug 25, 21 @ 8:34 am
Thoughts are, read the paper itself not the sound bites of an article describing the paper. It’s interesting. 1) They gathered their data from ~18k individuals who are already using payday-loan-type services, which the authors recognize is not as representative of the general population, but likely to capture the more chronically unemployed/most at risk of unemployment/credit challenged. 2) The authors concede that “ending pandemic UI increased employment by 4.4 percentage points [later in the paper equated to 20 percent improvement vs. Remain states] while reducing UI recipiency by 35 percentage points [meaning, ending benefits meant people on UI dropped by ~1/3] among workers who were unemployed and receiving UI at the end of April 2021.” This seems to be consistent with the recent FEE study that showed states that ended their programs early had the best unemployment rates (2-4% range), whereas Illinois, which didn’t, has one of the worst unemployment rates nationwide (7.1%). 3) That the value of the overall benefits fell a lot ($248/wk), while earnings rose just a little ($14/wk), and the downstream spending arguments based thereon (which is where the $2B comes from) actually validates the argument that paying people not to work was a better deal for many vs. having any job at all. 4) The authors recognize confounding factors, including that: “A major threat to
identification when it comes to analyzing the behavior of unemployed individuals is that these two groups of states may have very different shares of short and long term unemployed. This reflects, among other things, the fact that the Retain states tended to be Democratic leaning, and instituted more restrictive pandemic mitigation measures in 2020—including restrictions in the
hospitality sector—which was likely to have built up a larger set of long-term unemployed in the Retain states.” 5) This latter point also feeds in to the authors’ recognition that some of the return to work in the early-exit states was because of benefit exhaustion under state law itself. Specifically: “Figure 1 shows that the early withdrawals led to a substantial reduction in UI recipiency. The timing of these changes line up precisely with the timing of when the states withdrew from pandemic UI (i.e., June 12, 19, or 26). The sharp drops occurring in the week of withdrawal are consistent with benefit exhaustion from these policies.” 6) The authors do not account for or attempt to balance out the spending/benefits that would accrue to the taxpayer whose funds were used to pay for these benefits, who now, at least in theory, can keep these funds that they earned to keep in their pocket and spend.
So as with everything, nothing is easy.
Comment by Mary Wednesday, Aug 25, 21 @ 8:37 am
It was always a canard. We have struggled to find teachers, bus drivers, and paraprofessionals for better than 6 years. The problem with teachers really went into overdrive in 2013-2015 when the number of people taking licensure tests dropped by almost 75% in Illinois. And yes, that number is correct.
My PTSD from the time period is making it hard to remember what changed in Illinois during that time period. Hmmm…
Comment by JS Mill Wednesday, Aug 25, 21 @ 8:38 am
===at least that’s what an honest person does.===
“Ok”
So we’re starting today off with the “angry-creepy” people weighing in on… honesty?
Comment by Oswego Willy Wednesday, Aug 25, 21 @ 8:40 am
My Corona with a full-throated support of government paid child care for those parents who can only find minimum wage jobs.
Kudos.
Comment by Flyin' Elvis'-Utah Chapter Wednesday, Aug 25, 21 @ 8:44 am
8 out of 8 didn’t find a job in those states that kept it, so…
Comment by Citizen Kane Wednesday, Aug 25, 21 @ 8:44 am
JS Mill-yep.
It’s almost like people aren’t going to invest in an education for a job that will be constantly villified by the right for benefits deemed “too generous”.
Comment by Flyin' Elvis'-Utah Chapter Wednesday, Aug 25, 21 @ 8:48 am
They sampled individuals who have a permanent relationship with payday advance companies. A very unique slice of the population. Not very representative though.
“Our data comes from Earnin, a financial services company that provides earned wage access services when users connect their bank accounts. Through this connection, Earnin maintains a database containing user tags with information about each user…We follow this cohort of 18,648 individuals”
Comment by Donnie Elgin Wednesday, Aug 25, 21 @ 9:00 am
Mary most of what you’re saying is directly addressed at the link. For example, that 4.4 percentage point increase in employment relative to those on benefits translated to 1 in 8 of the now benefit-less finding jobs while 7 of the 8 could not, meaning most people who lost benefits still can’t find jobs. Then you list illinois as being at the bottom of the list but don’t mention states like Alaska, Arizona, and Maryland right there in the same part of that list and they ended benefits.
Comment by SWIL_Voter Wednesday, Aug 25, 21 @ 9:04 am
===Are 5he help wanted signs only for low paying entry jobs?===
The sign on the door of the gas station is advertising a $12 wage. That seems pretty low paying entry level, especially when the scheduled increase to minimum wage in January is going to take minimum wage to $12 an hour.
The issue in the labor market is garbage wages, not lack of potential workers. If a company is hiring at or near minimum wage they should expect the applicant pool to reflect that. If they impose additional standards, like education, clean criminal records, etc, without increasing the wage they’re not really adjusting to the labor market.
===Decent job. Not great. But new hires literally never make it thru their probation period. ===
This sounds like a company that is using it’s employees as a means rather than the end. If a company wants to treat labor like an input they may wind up suffering greater costs for it, but the philosophy of some in the private sector doesn’t actually involve treating people as human beings. If they’re hiring people and they’re also unable to retain them, especially a large number of them, then it’s the company’s fault. Either their training is garbage or they’re not paying a high enough wage to attract the workers they need, or maybe both. It could also just be an abusive environment run by managers who are terrible.
===The problem with teachers really went into overdrive in 2013-2015 when the number of people taking licensure tests dropped by almost 75% in Illinois. ===
Over the last decade or so teaching went from being a career to a scapegoat and that’s before finding out what some districts expected to be able to pay as a starting wage for teachers which was literally below what the new $15 minimum wage would be.
As a society we need to get away from this idea that desperation is an appropriate mechanism to suppress wages and recognize that the labor market is more complicated than that and that workers do have choices and that based off of our census results, a lot of those workers just leave to places that pay higher wages than our rural communities and that people with advanced degrees or specialized skills aren’t excited about the idea of moving to places that are undeserved by their profession, especially not for a garbage wage, and especially not after amassing tens of thousands of dollars of student debt.
Comment by Candy Dogood Wednesday, Aug 25, 21 @ 9:16 am
To the post,
The costs remained (like maybe child care) and as folks ponder honesty to employment, the costs remain versus revenue gained.
Comment by Oswego Willy Wednesday, Aug 25, 21 @ 9:17 am
It’s almost as though the population is down more than 600,000 people over the past year. Yes, I realize many if not the majority of deaths were not of those working age. But they are wider reaching than many seem to want to acknowledge when it comes to the ability of people to find child care, work extra jobs, etc.
Comment by wildcat12 Wednesday, Aug 25, 21 @ 9:23 am
The important take of the article was this: “Instead, it was largely due to workers like the self-employed and long-term unemployed who lost their aid entirely since they’re ineligible for traditional state benefits.” In other words, reducing the $300/week for those who were not receiving any other unemployment benefits (because they were otherwise ineligible) did work. So not enough of an incentive for the ones who still receive regular unemployment benefits to find the innumerous jobs available (many with hiring bonuses). But that probably speaks more to needing the whole unemployment system to be improved rather than just taking money away from everyone (many of who may still need the boost from that $300 during the pandemic).
Comment by Simply Sayin' Wednesday, Aug 25, 21 @ 9:28 am
The party who has cut the extra unemployment income in a pandemic is the one who is making the pandemic worse by not implementing health mandates. So cut taxes to the benefit of the wealthiest, cut the poorest and scream “socialism” at them, yell that Christianity is under attack, create very unhealthy conditions and oppose Medicaid expansion, even after voters approve it (Missouri). That’s the GOP way.
Comment by Grandson of Man Wednesday, Aug 25, 21 @ 9:32 am
Cutting these benefits so people will feel like they’re forced to take menial work requires having a lot of hate in your heart. Especially when the source of those funds are federal and don’t impact the state’s budget. Especially when those funds would represent a net positive economic impact on the communities where they’re spent.
Just a lot of hate.
===The costs remained (like maybe child care) ===
Obviously the laws that make it illegal to leave children of certain age home alone need to be repealed. That’s clearly the conservative solution here.
Comment by Candy Dogood Wednesday, Aug 25, 21 @ 9:41 am
==Insufficient data to draw a conclusion.==
Valid point. Depending what week UI benefits ended in June, the time period studied might cover only 6 weeks.
Comment by City Zen Wednesday, Aug 25, 21 @ 10:25 am
Candy. In the case of the widget company, consumers and competition from China control wages. Not corporate greed. Last years average take home pay was $51.5 k with very modest o.t. Decent insurance, 401k, ETO , all after 90 day pre union probation. $22.50 start pay. Manufactures throughout southern Illinois are experiencing worker shortages and retention rates.
Comment by Blue Dog Wednesday, Aug 25, 21 @ 10:43 am
BTW. wish we still had that Oreo production in state. Terrible that American consumers are still gobbling them up.
Comment by Blue Dog Wednesday, Aug 25, 21 @ 10:46 am
Blue Dog-where in southern Illinois, and I mean south of I-70, are there manufactors paying 51.5K, plus benefits, after a 90 day probation?
Comment by Flyin' Elvis'-Utah Chapter Wednesday, Aug 25, 21 @ 10:56 am
Elvis. Contact a USW office near you.
Comment by Blue Dog Wednesday, Aug 25, 21 @ 11:14 am
While political partisanship focuses on compassion vs lazy bums, it should be understood that unemployment benefits are meant to keep cash and spending flowing thru the economy to stave off a catastrophic depression. It keeps grocery stores and gas stations operating. That some funds may not be ideally targeted to the right households is besides the point in maintaining a minimum level of economic activity.
Comment by VerySmallRocks Wednesday, Aug 25, 21 @ 11:38 am
“benefits were keeping the unemployed from looking for jobs and fueling a labor shortage, they claimed”
There isnt a labor shortage. There is a wage shortage. If benefits were doing anything, it was reminding people that quality of life outweighs low paying jobs and that is clearly evidenced by those continued “labor shortages” in states that withdrew aid early.
Comment by Bothanspied Wednesday, Aug 25, 21 @ 11:43 am
Blue dog You keep citing these numbers without a citation
“As of Mar 31, 2021, the average annual pay for the Manufacturing jobs category in Illinois is $21,856 an year. Just in case you need a simple salary calculator, that works out to be approximately $10.51 an hour. This is the equivalent of $420/week or $1,821/month.
Manufacturing Annual Salary in Illinois ($21,856 Avg | Jul …
www.ziprecruiter.com/Salaries/Manufacturing-Salary–in-Illinois
Comment by very old soil Wednesday, Aug 25, 21 @ 11:47 am
for more detail from an official source see
https://www.bls.gov/oes/current/oes_il.htm#51-0000
Comment by very old soil Wednesday, Aug 25, 21 @ 11:51 am
=== Manufactures throughout southern Illinois are experiencing worker shortages and retention rates.
Wasn’t this true before Covid-19? It’s more likely related to the decreasing population especially among young folks.
Comment by ArchPundit Wednesday, Aug 25, 21 @ 12:04 pm
== Elvis. Contact a USW office near you.==. - Blue Dog.
Bro, how about just giving us a link to all these job openings? If they are so plentiful, there surely must be links to them.
Comment by low level Wednesday, Aug 25, 21 @ 12:11 pm
typical rightwing nonsense, along with the ot he 95% of what they say and believe
Comment by truthteller Wednesday, Aug 25, 21 @ 12:23 pm
==Bro, how about just giving us a link to all these job openings?==
USW reported over a half billion dollars in revenue last year. They are more than equipped provide the jobs portal you require.
Comment by City Zen Wednesday, Aug 25, 21 @ 12:27 pm
Bro. What’s a link.
Comment by Blue Dog Wednesday, Aug 25, 21 @ 12:42 pm
===What’s a link?===
It’s how you get information if you can’t use a pay phone and you can’t go to the library to look up something in their encyclopedia.
Or you could just give us the name of this wonderful company.
Comment by Da Big Bad Wolf Wednesday, Aug 25, 21 @ 12:55 pm
Blue Dog a link is the bottom line of my two comments. Try clickng on one
Comment by very old soil Wednesday, Aug 25, 21 @ 1:19 pm
Very old. Trying to use clipboard but am extremely challenged technologically.
But assured, I just reached out to some of my steel worker connections and I not only stand by my comments, but double down on them.
Comment by Blue Dog Wednesday, Aug 25, 21 @ 1:30 pm
====But assured, I just reached out to some of my steel worker connections and I not only stand by my comments, but double down on them.
What is different from Pre-Covid? Were they having the same problems? Given many rural areas are facing the same problem over time it wouldn’t be surprising. especially with a declining population with fewer and fewer young folks.
Comment by ArchPundit Wednesday, Aug 25, 21 @ 1:36 pm
Illinois unemployment rate 2019 averaged around 4.25%. 2020 around 10%. Current around 7.2%. It appears many can’t get back in work force for a variety of reasons.
Comment by Blue Dog Wednesday, Aug 25, 21 @ 1:42 pm
Illinois unemployment rate is at 7.1%. It was 12% a year ago, 16.5% a year ago April.
So people are getting jobs. The problem has been childcare. No childcare, mom or dad can’t go to work.
Comment by Da Big Bad Wolf Wednesday, Aug 25, 21 @ 1:43 pm
So, are you going to answer my question? When did the labor shortage for the specific jobs you are talking about start?
Comment by ArchPundit Wednesday, Aug 25, 21 @ 1:44 pm
Arch. Can’t answer that. But these are metro east jobs. The widget fa tory is rural and does pose challenges in drawing youth. The point to the post is unemployment is still high, that doesn’t mean there aren’t jobs out there. Folks are choosing to stay out for some reason.
Comment by Blue Dog Wednesday, Aug 25, 21 @ 1:48 pm
I hereby double down on any and every unsubstantiated specious claim I’ve ever made…for what it’s worth.
Comment by Dotnonymous Wednesday, Aug 25, 21 @ 1:55 pm
===he point to the post is unemployment is still high, that doesn’t mean there aren’t jobs out there. Folks are choosing to stay out for some reason.
Choosing is doing a lot of work there. People understand disruptions to supply chains, but for some reason disruptions to labor are always blamed on laziness. Since the pandemic started we have seen human services and hospitality industries facing massive disruptions. People seemed to think just reopening things would result in everything going back to what they were, but the people working in those two industries also looked for new jobs that they might actually like more. Restaffing restaurants and other hospitality is going to be facing fairly significant challenges because people have left the sector of the economy. Similar has happened to human services like child care that was already marginal employment.
If you do not have child care because there is a child care shortage you cannot get a full time job. School starting will help with this since elementary kids will likely be back in school full time this fall.
Of course, the unemployment rate in Metro East and Southern Illinois is lower than the overall state. January 2020 it was 3.3 and 3.7 for the respective areas. January 2021 it is 6.6 and 6.9. That’s lower now at 5.7 and 6.2.
The problems you are citing are long term trends and not due to some short term trend though the short term trend exacerbated a bit due to labor market disruptions. It looks like, if people get the vaccine, the labor market will be back to about where it was in January 2020 by January 2022. It’s not extended unemployment that is causing a labor shortage, but an actual labor shortage with additional labor market disruptions in two sectors.
Southern Illinois needs more people.
Comment by ArchPundit Wednesday, Aug 25, 21 @ 2:04 pm
In the post-fact political world this doesn’t matter. Political decision have never been 100% rational, but Trump really ripped the band-aid off and pushed the national Republican Party to a place where reality doesn’t matter, it’s only what you feel about a situation and what you feel is likely to be more impacted by your Facebook/Instagram memes and favorite Fox News blowhard than anything else.
Comment by Chicago Blue Wednesday, Aug 25, 21 @ 3:24 pm
Glad to see Governor Pritzker was wise enough not to end benefits early. As it is there are going to be issues for many families after Labor Day when the benefits end per federal law. IRMA, IMA, Chamber and others sent the Governor a letter arguing for ending the benefits early. My organization - Shriver Center on Poverty Law - and others argued against that position. I believe we were correct.
Comment by Jeremy Rosen Wednesday, Aug 25, 21 @ 3:47 pm