Yale Study Finds $ 600 Unemployment Bonuses Didn’t Lead to Less Work

  • Yale University economists found no evidence that weekly $ 600 unemployment benefits that Congress authorized in March reduced employment.
  • The Chicago Fed also found a similar trend in June 2020.
  • The findings directly challenge a claim frequently made by Republican lawmakers and members of the Trump administration that the additional unemployment payments decreased people’s desire to rejoin the workforce.
  • The expanded benefits of the CARES Act, which provided a $ 2.2 trillion stimulus package in March, expire on July 31.
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A report by Yale University economists found no evidence that weekly $ 600 unemployment benefits authorized by Congress in March in response to the COVID-19 outbreak reduced employment in the United States.

Overall, the results suggest that the expanded benefits “did not encourage layoffs during the start of the pandemic or deter people from returning to work once the companies began to reopen.”

“Workers facing larger expansions in unemployment insurance benefits have returned to their previous jobs over time at rates similar to others,” economists said. “We found no evidence that more generous benefits discourage work, either at the start of the expansion or when companies sought to return to business over time. In future research, it will be important to assess whether the same results hold when states are move to reopen. ” “

The $ 600 per week unemployment benefits millions of Americans have been receiving under the CARES Act expire in late July. This occurs when members of the Trump administration have criticized these benefits for unemployed Americans, alleging that they discourage people who return to work.

White House economic adviser Larry Kudlow told CNN in June that the measure was a “disincentive” to work, adding that “we are paying people not to work.”

Conversely, the study found no evidence that more generous benefit recipients were less likely to return to work. The researchers concluded that workers who received the largest increases in their unemployment benefits relative to their wages did not experience further declines in employment after the CARES Act was enacted.

The researchers used weekly data from Homebase, which is a company that provides scheduling and scheduling software for small businesses in the United States.

“The data does not show a relationship between generosity of benefits and employment pathways after the CARES Act, which could be due to the collapse of labor demand during the COVID-19 crisis,” said Joseph Altonji, professor of economics Thomas DeWitt Cuyler at the College of Arts and Sciences, and co-author of the report.

The Chicago Federal Reserve Bank found a similar trend, according to MarketWatch. “Those who currently collect benefits seek more than twice the intensity of those who have exhausted their benefits,” said the study published in June 2020. The Chicago Fed study also noted that unemployment benefits generally last six months, while that people on average pay about 35% of their weekly salary from the previous week.

Republican lawmakers on Monday unveiled a $ 1 trillion stimulus plan that includes a second direct payment of $ 1,200 for Americans.

This plan, which was first introduced in the Senate by Iowa Sen. Chuck Grassley, also includes provisions for another round of stimulus payments, an extended but reduced unemployment benefit, and $ 60 billion allocated for more small business loans.

These provisions would first have to be approved by the Democrat-controlled House of Representatives and signed before going into effect.

Democratic lawmakers have indicated their willingness to bargain around the exact number on the extent of unemployment benefits.

“Look, it’s not $ 600 or fraud,” House of Representatives Majority Leader Steny Hoyer said in a recent interview. “Pelosi said the other day, which I thought was a great line: ‘We don’t have red lines, we have values. We are entering these negotiations with values.”