States Put Enhanced Unemployment Benefits to the Test
The United States is about to engage in a real-time economic experiment that federalism is making possible.
The issue to be tested: whether the federal government’s more generous unemployment benefits are distorting the labor market to such a degree that people are more willing to take benefits than a job.
The test: Nine states, and possibly more to come, are dropping out of the federal government program, and reducing benefits:
Tennessee Gov. Bill Lee informed the United States Department of Labor [his state would be dropping out], joining Alabama, Arkansas, Iowa, Mississippi, Missouri, Montana, North Dakota, and South Carolina in ending state participation in federal unemployment programs.
“Families, businesses and our economy thrive when we focus on meaningful employment and move on from short-term, federal fixes,” Lee said in a statement. The assistance program will end in June.
It’s one of the few times we will be able to see talking points put to a real-world test – with data to show whether the lowered benefits changed the incentives to work, or if the more generous benefits are not the real cause of labor disruption.
Let’s get started.