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Job searches are down in states cutting federal unemployment benefits early, not what you'd expect to see from a 'disincentive to work'

Business Insider logo Business Insider 6/23/2021 asheffey@businessinsider.com (Ayelet Sheffey)
graphical user interface, calendar: Help Wanted sign at taco stand in California Thomson Reuters © Provided by Business Insider Help Wanted sign at taco stand in California Thomson Reuters
  • Half of all US states - all GOP-led - are cutting Biden's unemployment benefits early, citing a labor shortage.
  • But Indeed data found job searches are still down in the states cutting off the benefits early.
  • This suggests the benefits are not disincentivizing work as much as the GOP argues.
  • See more stories on Insider's business page.

Twenty-five GOP-led states have so far opted to end President Joe Biden's $300 weekly unemployment benefits early to incentivize residents to get back to work. But it looks like the cuts aren't motivating people to step up their job searches.

Indeed's hiring lab released a report on Tuesday that found job-search activity is down in states that have opted to end the benefits early. The data, measured by clicks on job postings through June 18, showed increased searches in some of the states ending benefits early and decreased searches in others, but overall, total search activity was down.

chart, line chart: Indeed: Job search activity and state UI cutoffs. Indeed, news reports © Indeed, news reports Indeed: Job search activity and state UI cutoffs. Indeed, news reports

"It is unclear why search activity is below the baseline in states where federal UI (unemployment insurance) benefits have ended," the report said. "If overly generous federal UI benefits were holding back job seekers, then we would expect search activity to increase, relative to the national trend, in states where those benefits have ended."

This is the same trend seen with data on searches collected through June 4. Indeed's Jed Kolko, who authored the report, wrote on Twitter on June 9 that decrease in job searches is "not what you'd expect" in states ending unemployment benefits early.

Insider's Ben Winck reported in May that the "work disincentive" theory dates back decades and largely rests on a Reagan-era work, political scientist Charles Murray's 1984 book "Losing Ground," which rests on racially suspect data.


Video: Job searches fell in states ending federal unemployment benefits (Yahoo! Finance)

Replay Video

While it's unclear why job searches are down in states ending benefits early, it could suggest that unemployment benefits are not deterring people from returning to the workforce as much as Republicans argue.

The May jobs report showed 559,000 payrolls being added, but Insider reported at the time that benefit cuts had not yet taken effect, more evidence that the benefits might not be disincentivizing work.

Some Democrats, like Sen. Bernie Sanders of Vermont, have criticized ending the benefits early, but White House Press Secretary Jen Psaki said the states that are cutting off benefits "have every right" to do so. Separately, Biden said it "makes sense" for benefits to expire in September.

"A temporary boost in unemployment benefits that we enacted helped people who lost their jobs through no fault of their own, and who still may be in the process of getting vaccinated," Biden said in a speech earlier this month. "But it's going to expire in 90 days - it makes sense it expires in 90 days."

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