Ending unemployment benefits was premature – the Bowdoin Orient
Despite the rationale for ending extended unemployment benefits, there is little evidence to prove that it will reduce unemployment.
In response to the COVID-induced economic recession, the federal government has increased unemployment benefits. As part of the Unemployment Insurance Extended Benefit Program, the Federal Pandemic Unemployment Compensation (FPUC) offered a federal premium of $ 600 per week to the unemployed in addition to existing state-level benefits. Eventually, that bonus fell to $ 300 per week and ended nationally on September 4, Labor Day.
Eventually, that bonus fell to $ 300 per week and ended nationally on September 4, Labor Day.
These extended unemployment benefits not only put food on the table for workers who couldn’t find jobs, but also ensured that consumers were spending in the economy, buying the goods and products they needed. . This helped ensure that the economy did not sink deeper into the recession caused by the pandemic. The recent removal of these benefits came amid claims that a cut in unemployment benefits would increase employment and help alleviate the nationwide labor shortage. There is little evidence, however, to prove that ending extended unemployment benefits will reduce unemployment.
Despite the evidence proving that unemployment will not necessarily decrease once additional unemployment benefits are removed, nearly half of the states have decided to cut them even sooner. Economic Policy Institute (EPI) research based on analysis of state-level early terminations data showed that any potential gain in job growth brought about by lower benefits is outweighed by what economists call the “consumer demand effect”. This effect describes the situation in which households tend to spend less when unemployment benefits are reduced, ultimately slowing employment growth. On top of that, new research has found that early termination of extended benefits resulted in only a slight increase in job search.
The previously mentioned research from the EPI shows that although labor income increased by $ 14 per unemployment recipient per week in states that removed benefits before the September deadline, unemployment income declined by 278 $ per week, leaving recipients with a net loss of income of $ 263 per recipient. The study showed that because they had lower incomes, the unemployed were spending $ 145 less per week, which not only contributed to less money being invested in the economy, but also to a drop in l consumer confidence index. Moreover, a recent study has shown that only a small percentage of those who lose their unemployment benefits have been able to find a job.
Despite the evidence for UI benefits in times of turmoil, conservative voices still dominate the media and push the view that living on welfare promotes laziness. Senate Minority Leader Mitch McConnell said in May 2021 that the federal government should end “the special bonus given to people to stay at home.” Ted Cruz, Republican Senator from Texas, also said those who will now lose the benefits should find a job, suggesting, “Um, find a job? “
Without a clear understanding of UI and how it protects the most vulnerable, arguments like “just finding a job” miss the point of continuing to provide benefits. The extension of unemployment insurance not only kept people afloat, preventing them from falling into poverty, but it also acted as a guarantee against the impending collapse of the economy. By reducing unemployment benefits, we are not reducing people’s laziness. Instead, we end up hurting the economy and putting even more pressure on those in vulnerable positions.
Unemployment insurance can help those who are often failing by the socio-economic system. In American history of pulling you by your boots, these are the people who are often targeted and asked to do the work necessary to build wealth. What is often left out is the number of people who have failed or, better said, who have been rejected by the system.
If we accept that our current economic system is failing and that the people at the bottom are the ones who bear the worst consequences, we must find ways to empower the most vulnerable and ensure that they are given a decent standard of living. . A person who relies on unemployment benefits is not lazy – instead they have found themselves in a system in which jobs in an area do not pay enough for rent, or perhaps where there is none. no jobs.
The myth of the person claiming unemployment insurance to rip off the state doesn’t hold firm when we look at the data on average weekly unemployment benefits before the pandemic. Average payments before the pandemic were $ 387 nationally, ranging from an average of $ 215 per week in Mississippi to $ 550 per week in Massachusetts. For reference, if a person working at Bowdoin before the pandemic on $ 17 an hour were to go claim unemployment for a maximum of 26 weeks, with other conditions applying, they would receive $ 600 per week, this which equates to $ 7.25 an hour. If they were to receive the extra $ 300 on top of that, they would have come close to $ 11. Either way, the income they receive is not close to the level of a living wage.
The additional unemployment benefits should have continued well beyond September 4, and more should be done by the government – and by us – to defend such programs and promote their expansion. To think that this only prevents laziness is in itself the lazy way people analyze the program, disregarding overall economic trends and how they can help people not fall into the poverty trap. If we do not make a change, the government will have to bear more costs for individuals due to drug addiction, incarceration, violence and other deviant activities that can result from the precarious financial situation of a person. anybody. By ensuring that people have enough to eat and live, we not only restore people’s dignity, but we prevent the economy from going into further debt.
Radu Stochita is a member of the 2022 class, Song Eraou is a member of the 2023 class.