"US Regions Ending Unemployment Benefits Show Similar Employment Rates to Those Maintaining Them"

WSJ "Federal Unemployment Benefits Support Has Little Effect"
States That Ended Unemployment Benefits Have Lower Unemployment Rates

[Image source=AP Yonhap News]

[Asia Economy Reporter Kim Suhwan] In the United States, where about half of all state governments have ended the federal government's unemployment benefits support program, reports have emerged that the employment rates in states that have ended the program are similar to those in states that continue to provide unemployment benefits support.

On the 1st (local time), The Wall Street Journal (WSJ) reported that 25 state governments have so far ended the federal unemployment benefits support program, and the growth rate of new employment in these states is similar to that of the remaining states.

According to WSJ, the increase rate of the nonfarm payroll index (change in the number of new jobs excluding agriculture and livestock sectors) from April to July was 1.33% in states that ended federal unemployment benefits and 1.37% in states that did not.

Additionally, WSJ reported that the average unemployment rates in states that ended federal unemployment benefits and those that continue to maintain them were 4.9% and 6.2%, respectively, as of last July.

Previously, the U.S. government implemented a policy to significantly increase unemployment benefits as part of the COVID-19 economic recovery efforts. According to this, the Joe Biden administration provides additional federal unemployment benefits on top of the state-level unemployment benefits systems. As a result, citizens could receive $300 (approximately 340,000 KRW) per week in federal unemployment benefits along with state unemployment benefits, with a maximum monthly payment of up to $4,492 (approximately 5,020,000 KRW) depending on the state.

As of last July, the total number of jobs in the U.S. was reported to be about 5.7 million fewer than the level in February of the previous year. Although the government significantly increased unemployment benefits as a measure to boost employment rates, the effect appears to have been limited.

Goldman Sachs, through its own research, analyzed that if all state governments had ended the federal unemployment benefits support policy, the number of new jobs in July would have increased by an additional 400,000 on top of the existing growth, and by the end of the year, 1.5 million new jobs would have been created.

Goldman Sachs stated, "There is clear evidence that the end of federal unemployment benefits payments affects the growth rate of new employment."

The industry has expressed similar views. Jim Ballis, CEO of the restaurant chain "Sizzlin Platter," based in Utah, said, "There seems to be a link between unemployment benefits support and people staying at home," adding, "The change in employment numbers was more pronounced in states that reduced unemployment benefits."

However, experts pointed out that the effects of ending unemployment benefits have not yet been fully reflected and that employment growth rates may vary because lockdown measures differ by state.

The federal government's unemployment benefits support was one of the most contentious issues between the ruling and opposition parties in U.S. politics before its introduction earlier this year. At that time, the ruling Democratic Party called for active intervention to recover employment rates after the COVID-19 crisis, while the Republican Party opposed the policy, arguing that it was ineffective and a waste of budget.

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