The Dark Side of Excessive Welfare in the US... Job Seekers Increase After Unemployment Benefits Cut

Early Termination of Federal Support in 22 States... Employment Market Gains Momentum

Job Posting Installed Inside an American Department Store [Image Source=AP Yonhap News]

[Asia Economy Reporter Kim Suhwan] In some U.S. states, the early termination of federal unemployment benefits has led to a surge in job seekers. This supports experts' claims that excessive welfare can actually hinder economic vitality.

On the 27th (local time), The Wall Street Journal (WSJ) reported that in 22 states that ended the federal unemployment benefits program early, there was a significant increase in citizens actively seeking employment.

Previously, the U.S. federal government temporarily increased unemployment benefits as part of economic recovery efforts following the COVID-19 pandemic.

As a result, citizens were able to receive both state unemployment benefits and an additional $300 per week in federal unemployment benefits. This measure was scheduled to continue until September of this year.

However, as unemployment benefits exceeded minimum wage levels, the number of people receiving benefits without working increased, leading to criticism that this caused imbalances in the labor market.

Consequently, states led by Republican governors have increasingly opted to end the federal unemployment benefits program early.

In fact, WSJ reported that in these states, the number of job seekers rose again ahead of the reduction in unemployment benefits, revitalizing the labor market.

For example, Missouri, which ended federal unemployment benefits on the 12th, recorded an unemployment rate of 4.2% at the end of last month, lower than the national unemployment rate of 5.8%.

According to analysis by global financial firm Jefferies, in states that announced the end of unemployment benefits in June, the number of benefit recipients decreased by 13.8% as of the 12th. This decline rate is greater than that of states ending the program as originally planned in September (5.7% decrease).

Economic experts have long criticized the Biden administration's welfare expansion and related fiscal policies, arguing they suppress economic vitality.

Former U.S. Treasury Secretary Larry Summers stated, "The government's fiscal policy is excessive," adding, "This increases inflation risks and will ultimately hinder economic development."

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