States That Cut Federal Unemployment Early Only Hurt Their Economies

A study found that states that cut off federal unemployment benefits early hurt their economies more than the move boosted employment numbers.

A person in a mask, carrying bags, walks

States that cut off unemployment benefits with the hope of motivating people to return to work are discovering their plan may be backfiring, as new research shows that their economies have not been stimulated by taking people off of unemployment.

As states attempt to jumpstart their economies in the aftermath of the pandemic, 26 states (all but one of which have a Republican governor) have or are attempting to put a halt to unemployment benefits that were put in place due to shutdowns. The argument has always been based around job creation, with the idea that ending these benefits will encourage people to go back to work and that proved true to an extent, with states seeing a dip in unemployment.

But the amount of people returning to work has not been enough to make a noticeable difference in most states’ economies, as people have struggled to find work or resisted getting a job that does not even offer a livable wage for fairly obvious reasons. This research could be a sign of things to come on a national level, as extra unemployment benefits across the country are currently set to expire next month.

So far, President Biden has insisted that these unemployment benefits will not be extended past September 6, as Treasury Secretary Janet Yellen and Labor Secretary Marty Walsh said in a letter to lawmakers that “the boost was always intended to be temporary and it is appropriate for that benefit boost to expire.”

But this research indicates that Biden’s plan could actually end up hurting the national economy’s recovery instead of helping it. The basic assumption that taking away unemployment benefits will automatically lead to more people getting jobs has not actually shown itself to be true so far, at least not to the extent that many expected. And with the Delta variant remaining a growing issue across the country, America could easily find itself facing a much longer and more sluggish road towards economic stability than many had hoped.