Job Growth Twice as Fast in States Retaining UI

August Job Growth Was Twice as Fast in States That Retained UI – “People’s Policy Project,” Matt Bruenig, September 21, 2021

I ran across this author and his site while reading a commentary (referencing Matt Bruenig’s story) on McDonalds experience in Denmark at Yves Smith’s Naked Capitalism. Since my background over 40 odd years has been in manufacturing and the impact of direct Labor on it, I was drawn to that article and visited Matt’s site. This caught my attention.

Yes, there are people who may not want to work . . . period. In my experience, I have found this reasoning of not working outside of illness, children being home, etc. is not realistic. Most people do want to work . . . period.

In all of their wisdom, some states, half the states, mostly Republican states, put emphasis on back to work efforts . Emphasizing it by eliminating unemployment benefits or benefits which were put in place due to the Covid pandemic. This started back in June as detailed by Matt at People’s Policy Project.

Recently, the BLS released its August (monthly) local area unemployment data. The data showed once again UI cuts are not supercharging employment growth as depicted in the chart.

Matt Bruenig: “The federal government eliminated pandemic UI benefits on September 6 with the full support of President Biden. At the time, the available labor market data showed that this was a mistake:

states that had prematurely ended the benefits in the summer did not grow payrolls faster than states that didn’t and so the cuts served no purpose except to immiserate jobless people.

The Unemployment Insurance cuts did not supercharge employment growth and quite the opposite occurred. In August. States cutting UI benefits over the summer saw their payrolls grow by 0.12 percent. States retaining UI benefits grew their payrolls by 0.27 percent or more than twice as fast as the benefit-cutting states.

Half of the states announced in May of this year that they would be cutting UI benefits early, with the first wave of cuts happening in early June. The other half of the states held on to the pandemic UI benefits until September 6 when the federal government cut them off. Between that period, the states that cut UI benefits grew their payrolls by 1.47 percent. That states that did not cut UI benefits grew their payrolls by 1.60 percent.

No serious economic planner would look at this time series and say it shows we need to eliminate pandemic UI benefits in order to supercharge employment growth. And yet this is exactly what the federal government has now done with precisely that goal in mind.”

I agree with Matt, Biden quietly allowing Federal pandemic funding to end is not acceptable or the stick in the eye of Republicans which I would have liked to see, or showing much backbone. States still have resources to extend benefits, many have been running surpluses, and states are discussing tax rebates much of it will go into the pockets of those who do not need it. many states also have allocated federal Covid pandemic funds which they purposely did not release (Michigan is one example).

Putting the emphasis solely on Biden is a mistake and we need to call Republicans and states out.