Republican States That Cut Unemployment Early Not Seeing a Spike in Hiring

The Republican-led states that cut federal unemployment benefits in June have not seen a spike in hiring, The Washington Post reports.

Congress voted to provide enhanced federal unemployment benefits to laid-off workers through September but 20 states with Republican governors cut off the extra $300 weekly payments in June.

Republicans said the generous unemployment benefits were contributing to a worker shortage but early data shows no sign of an immediate spike in hiring.

The 20 states that cut off benefits have seen the same pace of hiring as the states that did not, according to data from the Labor Department, Census Bureau, and the payroll company Gusto.

Economists say the health concerns, child-care issues, and workers reconsidering their job choices have been bigger factors.

“If what we want is a speedy economic recovery, ending unemployment insurance is not the silver bullet,” Gusto economist Luke Pardue told the Post.

Minimal impact:

Businesses in Missouri and Kansas say the reduction in unemployment benefits has had a “small impact” on hiring.

Restaurant owners say workers rethinking their careers has made some reconsider returning to the food industry.

“Employees went out and found other industries. And that’s been a bigger problem than just the unemployment insurance. Getting restaurant hospitality workers back to our industry has been a challenge for almost every restaurant in the Midwest,” Kevin Timmons, a bar owner and former president of the Greater Kansas City Restaurant Association, told the Post.

Economist Arindrajit Dube of the University of Massachusetts at Amherst said the cuts have only made things harder for workers while not helping businesses.

“There is evidence that the reduced UI benefits increased self-reported hardship in paying for regular expenses,” Dube wrote, adding, “Of course, this evidence is still early.”

Cuts hit teen employment:

One trend that has changed after the cuts is the increase in teen employment. After the cuts, Gusto found an increase in hiring of workers over 25 years old while teen hiring sagged.

The trend appears the result of businesses turning to teens to fill jobs amid widespread worker shortages while the enhanced benefit kept some experienced workers at home.

The teen unemployment rate has fallen to its lowest level since the 1950s and many businesses have lowered their age requirements and offered bonuses to new hires to lure them into jobs.

Economists expect the teen job boom to end in September as many return to school.


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