Does $600 a Week in Additional Unemployment Stop People From Going Back to Work?

There are a lot of reactions to the now-expired additional unemployment benefits of $600 per week during the pandemic.

The reactions range from the extra money was needed to try and hold lives and the economy together to opinions that the money stopped people from working.

Howard Dvorkin, CPA and Chairman of Debt.com said, “There are many unemployed Americans who don’t like collecting unemployment checks. Give them a job, and they’ll jump at it. Then again, there are many lazy people who will actually work very hard to not work very hard.

Personally, I’d like to see the hundreds of millions of dollars now spent on unemployment benefits to be spent on job creation and training. How does that look? I have no clue. Perhaps these researchers do. Their report is chock full of complicated mathematical formulas, and I’d love to see them focus that intellect on how to teach people to fish, instead of handing them fish sandwiches every week.”

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A number of researchers at the Tobin Center for Economic Policy at Yale University recently published a paper on this very subject.

The researchers found “workers who experienced larger increases in UI (Unemployment Insurance) generosity did not experience larger declines in employment when the benefits expansion went into effect. Additionally, we find that workers facing larger expansions in UI benefits have returned to their previous jobs over time at similar rates as others. We find no evidence that more generous benefits disincentivized work either at the onset of the expansion or as firms looked to return to business over time.”

Researchers found some facts that challenge common beliefs. Notably, they state “workers facing larger UI expansions appear to be quicker to return to work than others, not slower. While they do not fully catch up to pre-Covid levels of relative employment conditional on controls, the gap has diminished over time. This serves as suggestive evidence against concerns that UI generosity disincentivizes returns to work.”

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The research paper concludes “preliminary evidence that expansions in UI replacement rates did not increase layoffs at the outset of the pandemic or discourage workers from returning to their jobs over time.”

Here is one thing I can guarantee for certain, this topic will be researched for years to come and there will be a wide range of differing opinions on this topic if increased unemployment benefits led to people not returning to work.

One question that can be debated for hours is if people should be forced to return to work in conditions that may be or feel unsafe. What do you think. Comment below.

You can read the full research paper below.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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