No evidence $600 kept workers on dole
Yale study finds idled workers receiving expanded benefits were sometimes quicker to return to jobs
A young office worker returns to work in the midst of the COVID-19 pandemic. (Shutterstock)
By Ted Cox
As Congress debates another COVID-19 relief package, a new Yale University study pooh-poohs conservative fears that the extra $600 a week in federal coronavirus unemployment benefits was keeping idled workers from returning to their jobs.
The expanded federal jobless benefits expired last week, and Republicans have resisted calls to extend them — as included in the HEROES Act passed by the House in May. Republicans have argued that the added benefits encouraged employers to lay workers off and subsequently discouraged workers from returning to their jobs.
Drawing from data provided by a company that provides scheduling and timesheet software to small businesses, the Yale study, “Employment Effects of Unemployment Insurance Generosity During the Pandemic,” found no evidence to support those conservative fears.
“We find that that the workers who experienced larger increases in (unemployment insurance) generosity did not experience larger declines in employment when the benefits expansion went into effect,” the study states. “Additionally, we find that workers facing larger expansions in UI benefits have returned to their previous jobs over time at similar rates as others. We find no evidence that more generous benefits disincentivized work either at the onset of the expansion or as firms looked to return to business over time.”
“The data do not show a relationship between benefit generosity and employment paths after the CARES Act, which could be due to the collapse of labor demand during the COVID-19 crisis,” said Joseph Altonji, a Yale professor and a co-author of the report.
The Yale News reported that the study “found that workers receiving larger increases in unemployment benefits experienced very similar gains in employment by early May relative to workers with less-generous benefit increases. People with more generously expanded benefits also resumed working at a similar or slightly quicker rate than others did.”
The study concludes that “as policymakers consider whether to extend the expansion of UI generosity past its initial July 31 expiration date, it is important to holistically consider the economic and public health impacts of such a policy. This note provides preliminary evidence that expansions in UI replacement rates did not increase layoffs at the outset of the pandemic or discourage workers from returning to their jobs over time. We note that our results do not necessarily imply that such responses do not exist — rather, they suggest that expanding UI generosity has not depressed employment in the aggregate. As many states struggle with surges in Covid-19 cases as they move to reopen, there are still good reasons to not incentivize everyone to return to work and to continue to support displaced workers regardless of the labor-market effects of such social insurance. However, we find no evidence to support concerns about adverse aggregate labor supply effects of expanded UI generosity in the context of the current pandemic.”