The Pace of Employment Growth in States Cutting UI Benefits

Is slower than for those that didn’t. From Steve Englander/Standard Charter Bank:

Source: Englander, “US – Benefit cuts not linked to job gains so far,” Global Research/Standard Charter Bank, 16 July 2021.

From the newsletter:

We found evidence that cutting or eliminating federal COVID-linked benefits reduced the numbers receiving benefits (see UI recipients drop in states cutting benefits), but June Bureau of Labor Statistics (BLS) state employment data do not indicate that the states that cut or had impending benefit cuts had higher employment gains (Figure 1). The first round of states cutting benefits (Alaska, Iowa, Mississippi, Missouri) clearly lagged other states. The eight states that reduced benefits a week later also lagged, but by a smaller margin.

We see this as a modest disappointment for those who expected to see a big, immediate impact from benefit reductions, but the conclusion is very tentative because of the survey dates. July state data should be more definitive on this score.

A more detailed examination, confirming little evidence of any effect, is provided by Arindrajit Dube in this blogpost (h/t dilbert dogbert).

So what has been the impact so far on the labor market? How have the policy changes impacted the number of people receiving UI benefits? And have these policy changes boosted jobs in those states so far? Here I use recent data from the Household Pulse Survey (HPS) collected by the Census Bureau to assess the short term impacts of the June expiration. Specifically, the HPS asks whether the respondent received UI in the last 7 days, which allows us to assess the impact of the policy expiration on recipiency. In addition, the HPS also asks whether the respondent is currently working, which allows us to evaluate the employment impacts. The most recent data goes through July 5, 2021.

Overall, the mid-June expirations of pandemic UI seem to have sharply reduced the share of population receiving any unemployment benefits. But this doesn’t seem to have translated into most of these individuals having jobs in the first 2-3 weeks following expiration. However, there is evidence that the reduced UI benefits increased self-reported hardship in paying for regular expenses. Of course, this evidence is still early, and more data is needed to paint a fuller picture.

 

 

 

 

22 thoughts on “The Pace of Employment Growth in States Cutting UI Benefits

  1. pgl

    “Overall, the mid-June expirations of pandemic UI seem to have sharply reduced the share of population receiving any unemployment benefits. But this doesn’t seem to have translated into most of these individuals having jobs in the first 2-3 weeks following expiration. However, there is evidence that the reduced UI benefits increased self-reported hardship in paying for regular expenses. Of course, this evidence is still early, and more data is needed to paint a fuller picture.”

    This sort of reminds me of those right wing predictions that the 2017 TCJA would lead to investment boom. Over 3 years later and I guess the right wing mantra is that “more evidence is needed”. Quick – get John Lott on the phone and tell him to start his magic data mining!

    Reply
    1. Dr. Dysmalist

      “there is evidence that the reduced UI benefits increased self-reported hardship in paying for regular expenses.”

      Remember, it’s not a policy failure if the cruelty is the point.

      Reply
      1. Moses Herzog

        Funny!!!!

        Not because what is happening to people as a result of bad Republican policies, but funny because the best humor has a large thread of truth running through it. Almost seems like a David Letterman punchline if he dared be that political back in the day. 5-star comment by you.

        Reply
        1. macroduck

          In the good old antebellum days, blacks were a different species than whites because Christian values did not allow for cruelty to humans. The claim that blacks were a lesser species allowed one to make money from a slave economy and feel smugly among god’s elect.

          Today’s analogous problem – cruel economic policies that don’t improve economic outcomes – needs another explanation. W.E.B. Dubois was probably right; there is a psychological wage in being “us”, simply because that means we aren’t “them”. Let “them” off the floor and it’s less psychologically remunerative to be “us”. Ick.

          Reply
  2. ltr

    Correspondingly, and unfortunately but unsurprisingly:

    https://www.nytimes.com/2021/07/20/upshot/medical-debt-americans-medicaid.html

    July 20, 2021

    Americans’ Medical Debts Are Bigger Than Was Known, Totaling $140 Billion
    A new study finds that health care has become the country’s largest source of debt in collections. Those debts are largest where Medicaid wasn’t expanded.
    By Sarah Kliff and Margot Sanger-Katz

    Americans owe nearly twice as much medical debt as was previously known, and the amount owed has become increasingly concentrated in states that do not participate in the Affordable Care Act’s Medicaid expansion program.

    New research * published Tuesday in JAMA finds that collection agencies held $140 billion in unpaid medical bills in 2018, the most recent year that data is available. An earlier study, examining debts in 2016, estimated that Americans held $81 billion in medical debt….

    * https://jamanetwork.com/journals/jama/article-abstract/2782187

    Reply
  3. pgl

    Kevin Drum was asking if any conservative ever bothers to criticize Faux News when we got the comment of the day:

    ‘If Fox can have a correspondent at the White House why not Mad Magazine?’

    Sad to say Mad Magazine has been out of print for some time.

    Reply
  4. Moses Herzog

    I love this post, because, (keep in mind I have high regard for education that was pounded into me by my Dad, to the point it almost made me want to reject it for some years) it’s easy for certain parties to “brush aside” the thoughts of a university professor and researcher (Arindrajit), but to write off the thoughts of Englander who has worked in the private sector and/or major investment banks over multiple years, that opinion/stance is not so easy to brush off. I’m actually curious how Menzie found this at around the same time as commenter dogbert made his outstanding comment. Whether it was just coincidence because Menzie is a prolific reader or if Menzie at least half-way searched it out.

    Great post by the way, one of Menzie’s better ones in my opinion. Semi-inspired by dogbert or purely “great minds think alike”, great post either way,

    Reply
    1. Barkley Rosser

      Moses,

      Since you such a high regard for education I thought you might be interested to know that Brent crude is now back at $71.85 and WTI at $69.97.

      Reply
      1. pgl

        That is SO close to $100 – not!

        Did you hear Kevin McCarthy complain about rising inflation today? I didn’t – had the TV on but had to turn the sound down as I cannot listen to Trump’s little minnie me any more.

        Reply
      2. Barkley Rosser

        And as of today WTI is above $71 while Brent is above $73, basically about back to where they were before they took that dip last week that set you off on a ranting bender, Moses.

        Reply
  5. ltr

    http://www.xinhuanet.com/english/2021-07/21/c_1310075015.htm

    July 21, 2021

    Nearly 1.48 bln doses of COVID-19 vaccines administered in China

    BEIJING — Nearly 1.48 billion doses of COVID-19 vaccines have been administered in China as of Tuesday, the National Health Commission announced Wednesday.

    [ Chinese coronavirus vaccine yearly production capacity is now 5 billion doses. Along with nearly 1.48 billion doses of Chinese vaccines administered domestically, another 570 million doses have been distributed internationally. A number of countries are now producing Chinese vaccines from delivered raw materials. ]

    Reply
    1. macroduck

      Too bad Sinovac and Sinopharm vaccines work so poorly. Indonesia and Thailand have both turned to non-Chinese vaccines after medical personnel caught Covid in large numbers after taking the full regimen of Chinese vaccines. Maybe China could import some AstraZeneca or Pfizer stuff. It’s what a responsible government would do.

      Reply
  6. ltr

    https://www.nytimes.com/2021/07/21/us/american-life-expectancy-report.html

    July 21, 2021

    Life Expectancy in U.S. Dropped 1.5 Years in 2020, Largely From the Pandemic
    The 18-month drop was the steepest decline since World War II, according to federal statistics. Black and Hispanic Americans were disproportionately affected.
    By Daniel Victor

    The coronavirus pandemic was largely responsible for shaving a year and a half from the life expectancy of Americans in 2020, the steepest drop in the United States since World War II, according to federal statistics released on Wednesday.

    An American child born today, if they hypothetically lived their entire life under the conditions of 2020, would be expected to live 77.3 years, down from 78.8 in 2019. It’s the lowest life expectancy since 2003, according to the National Center for Health Statistics, the agency that released the figures and a part of the Centers for Disease Control and Prevention.

    The difficult year also deepened racial and ethnic disparities in life expectancy, with Black and Hispanic Americans losing nearly two more years than white Americans. Life expectancy for Hispanic Americans dropped to 78.8 from 81.8, while the numbers for Black Americans dropped to 71.8 from 74.7. Non-Hispanic white Americans saw their life expectancy drop to 77.6 from 78.8.

    The statistics further quantified the staggering toll of the pandemic, which has killed more than 600,000 Americans as it has, at times, pushed the health system to its limits.

    Measuring life expectancy is not intended to precisely predict actual life spans; rather, it’s a measure of a population’s health, revealing either society-wide distress or advancement….

    Reply
  7. Daniel

    Good to see some kind of analysis on this, can’t wait to see real econometrics on it.

    The choice to cut benefits is itself endogenous. You can see those states lagging well before June, which may have prompted legislatures to look for any plausible way to shake it up. The newsletter doesn’t do a very helpful job. The blog post, however, is much more useful for generating inferences, but could still use controls.

    Reply
    1. Menzie Chinn Post author

      Daniel: Well, that (endogeneity) is the favorite comment in any given economics seminar. But in this case, I don’t think this is plausible as an explanation since the reductions seem to be ideology driven (rather than data driven). Now if you were to give a “deep endogenous” explanation — states with more ideologically driven commitment to reducing all sorts of government intervention (except tax subsidies to corporations to locate in the state) are more likely to have experienced slower growth in the past, well I could kind of buy into that interpretation.

      (Believe it or not, “South” is a great instrumental variable in many instances analyzing cross-state patterns.)

      Reply
    2. pgl

      “You can see those states lagging well before June, which may have prompted legislatures to look for any plausible way to shake it up.”

      Are you saying a blue state would have done this under the same economic conditions? I doubt it.

      Reply
    3. Moses Herzog

      Whether that was intentional or not, the last sentence by Menzie is very funny, coming from a guy born in the Midwest, but spent the great deal of his life in the “Southern Plains”. Readers may take that for however it’s worth to themselves.

      Reply
  8. ltr

    https://www.worldometers.info/coronavirus/

    July 21, 2021

    Coronavirus

    China

    Cases ( 92,364)
    Deaths ( 4,636)

    Cases per million ( 64)
    Deaths per million ( 3)

    [ Importantly, since Chinese coronavirus vaccines began to be administered in the country in June 2020 there have been only 2 coronavirus-related deaths and neither of the 2 deaths was of a vaccinated patient. Cases detected in China since June 2020, have been fortunately few in all and overwhelmingly imported. ]

    Reply
    1. ltr

      https://news.cgtn.com/news/2021-07-21/Chinese-mainland-reports-22-new-confirmed-COVID-19-cases-124nJynyuwE/index.html

      July 21, 2021

      Chinese mainland reports 22 new COVID-19 cases

      The Chinese mainland recorded 22 new confirmed COVID-19 cases on Tuesday: 2 local transmissions reported in southwestern Yunnan Province and 20 from overseas, the latest data from the National Health Commission showed on Wednesday.

      In addition, 23 new asymptomatic cases were recorded, while 453 asymptomatic patients remain under medical observation.

      This brings the total number of confirmed COVID-19 cases on the Chinese mainland to 92,364, with the death toll unchanged at 4,636.

      Chinese mainland new imported cases

      https://news.cgtn.com/news/2021-07-21/Chinese-mainland-reports-22-new-confirmed-COVID-19-cases-124nJynyuwE/img/34e78918cdf84e40b0f43f0e103499ca/34e78918cdf84e40b0f43f0e103499ca.jpeg

      Chinese mainland new asymptomatic cases

      https://news.cgtn.com/news/2021-07-21/Chinese-mainland-reports-22-new-confirmed-COVID-19-cases-124nJynyuwE/img/3ad8bae61a044c9a83a775ed119c4a4c/3ad8bae61a044c9a83a775ed119c4a4c.jpeg

      Reply
  9. 2slugbaits

    While I’m sympathetic with the conclusions of both Englander and Dube, I’m not sure they are looking at quite the right thing. I always thought that the reason some Neanderthal governors cut off enhanced benefits wasn’t to increase employment numbers as much as it was to increase the number of people looking for work. They were hoping that a larger pool of unemployed workers would put some downward pressure on wages. So I think the relevant metric should be changes in the civilian labor force. I haven’t looked at all fifty states, but in my state the change in the civilian labor force away from trend growth was miniscule and not statistically significant. So in that regard killing those enhanced employment benefits created a lot of pain for no gain.

    Reply

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