No Hiring Boom in States That Cut Unemployment Benefits Early: Analysis

No Hiring Boom in States That Cut Unemployment Benefits Early: Analysis

In an effort to speed jobless workers’ return to employment, 20 Republican-led states reduced unemployment benefits in mid-June. But according to a new analysis, those states did not see a boom in hiring, though they did see a change in the mix of workers getting new jobs.

The analysis, performed by the payroll processing firm Gusto for The Washington Post, found that employment growth has been roughly equal in states that ended the $300 per week supplemental federal unemployment payments in June and those that are continuing to pay them until Labor Day, when Congress scheduled them to expire.

Using April 2021 as a base, the total number of employed people rose by 11.6% in the states that cut unemployment benefits by the end of June, and by 11.2% in the states that did not.

However, in the benefit-cutting states, more workers over the age of 25 returned to work in June – an increase that was offset by fewer teenagers getting jobs. By contrast, in the states maintaining benefits a higher percentage of workers aged 15-19 found jobs.

“The findings suggest hiring is likely to remain difficult for some time, especially in the lower-paying hospitality sector,” the Post’s Heather Long and Andrew Van Dam write. “The analysis also adds perspective to the teen hiring boom, revealing that more generous unemployment payments played a role in keeping more experienced workers on the sidelines, forcing employers to turn to younger workers.”

Gusto economist Luke Pardue said the analysis shows that there is no clear and simple relationship between the enhanced unemployment benefits provided by Congress and the sluggish jobs recovery. “If what we want is a speedy economic recovery, ending unemployment insurance is not the silver bullet,” he told the Post.