US New Job Growth Slows... Is Monthly Unemployment Benefit of Up to 5 Million Won the Cause?

260,000 New Jobs in April... Far Below the Expected 1 Million
Bank of America: "It's More Beneficial to Collect Unemployment Benefits Without Working"
Industry Complaints That Hiring Employees Has Become Harder Due to Citizens' Reduced Job Seeking
Some States Decide to Suspend Federal Unemployment Benefits Payment

President Joe Biden [Photo by AP News]

[Asia Economy Reporter Kim Suhwan] U.S. President Joe Biden recently urged citizens to actively engage in job-seeking activities following disappointing employment growth figures. In response, opposition parties and experts have criticized the expanded unemployment benefits, arguing that some citizens are only collecting unemployment benefits without seeking jobs, which has contributed to the decline in employment numbers.

On the 10th (local time), President Biden stated at a press conference, "All citizens receiving unemployment benefits must accept suitable job offers; otherwise, they will no longer be eligible for unemployment benefits." This reiterated the clause in the current unemployment benefits system that suspends payments if recipients refuse appropriate job offers.

This statement from President Biden came after the April new employment figures released on the 7th showed weak results. According to the statistics, the number of new jobs in the U.S. last month was 266,000, only about a quarter of the expected 980,000.

Recently, the U.S. government significantly increased unemployment benefit payments as part of measures to recover from the COVID-19 economic downturn. The federal government expanded the unemployment benefits budget, allowing citizens to receive $300 (approximately 340,000 KRW) per week in federal unemployment benefits in addition to state unemployment benefits. As a result, some states provide up to $4,492 (approximately 5.02 million KRW) per month.

Compared to actual wages, unemployed citizens receiving unemployment benefits are earning more than many workers. According to The Wall Street Journal (WSJ), those receiving unemployment benefits currently earn more than workers making $15 per hour. The $15 hourly wage is twice the federal minimum wage of $7.25.

With nearly 4 million KRW available without working, citizens have become less motivated to seek jobs, leading to poor employment indicators.

Consequently, voices criticizing the Biden administration's unemployment benefits policy are spreading, mainly from the Republican Party. Republican Senator Ben Sasse pointed out, "Citizens are abusing the government's unemployment benefits system," adding, "The root of all problems is that unemployment benefits exceed earnings from working."

Joseph Song, an economist at Bank of America, said, "Based on current unemployment benefit payments, citizens earning less than $32,000 annually find it more advantageous to collect unemployment benefits without working." Song also predicted, "Based on this data, only half of the jobs lost since the COVID-19 pandemic will be recovered by the end of this year."

WSJ noted, "Many citizens have already realized that the government provides substantial money even while unemployed, leading millions to decide not to seek jobs."

Along with analyses that expanded unemployment benefits have discouraged job-seeking, industry complaints about increased difficulty in hiring employees have also emerged. Eric Terry, president of the Virginia Restaurant and Travel Association, lamented, "Unemployment benefits are the biggest problem," adding, "Because people rely solely on unemployment benefits and do not seek jobs, there is a widespread shortage of workers across the industry."

In response to such criticism, some state governments have announced plans to soon end federal unemployment benefit payments. Montana, South Carolina, and Arkansas have stated they will stop federal unemployment benefits by the end of next month.

On the other hand, there are views that there is no correlation between increased unemployment benefits and poor employment indicators. JP Morgan reported, "Our own research has not proven a correlation between increased unemployment benefit payments and decreased job-seeking motivation among citizens." The Federal Reserve Bank of Chicago also analyzed data from 2013 to 2019 and concluded that "people receiving unemployment benefits were more actively seeking jobs."

President Biden maintains his stance to keep the current unemployment benefits policy. He said, "Millions are still unable to find jobs since the COVID-19 pandemic," adding, "Our government will not abandon the people. We expect employment numbers to increase significantly as the economy recovers."

This content was produced with the assistance of AI translation services.