Aug 4, 2020 - Economy & Business

Unemployment benefits aren't creating a disincentive for job seekers

Illustration of workers on a line graph.
Illustration: Annelise Capossela/Axios

The extra $600 a week of unemployment insurance isn't creating a disincentive for job seekers, per a new study by Yale economists.

Why it matters: Even with that extra help, millions of Americans are barely making ends meet. Now it has expired, and congressional Republicans' argument against extending it — that it rewards unemployment — isn't backed by the data.

The big picture: Some small-business owners around the country have said they believe the extra $600 a week was making it more difficult for them to hire workers. But when the Yale economists zoomed out, they found that the benefit had no effect on the labor market.

  • "Our findings don't imply that nobody is making this particular tradeoff, but what we do find is that [the extra benefit's] aggregate effect on employment is zero," Dana Scott, one of the study's authors, tells Axios.
  • In fact, there are around 14 million more unemployed people than there are jobs, per the Economic Policy Institute. "If we’re in a scenario where the jobs aren’t there, searching isn’t going to help," Scott says.

The stakes: Reducing — or doing away — with the benefit could actually lead to bigger economic problems as people have even less money in their pockets and cut back on consumer spending, she says.

Go deeper: The unemployment situation is really, really bad

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