Over the last few weeks, states with Republican governors have been opting out of the federal government’s enhanced unemployment benefit program. The reason: generally, to encourage workers to get off the dole, and back in the labor force.
This experiment in incentives is starting to deliver some results. As the Wall Street Journal reports, there’s early evidence is that, in some places, changing benefit payments is shaping attitudes toward work:
Missouri [for example] cut off payments as of June 12, joining three other states as the first to do so. Seven states followed with an end on June 19, and this weekend, benefits are expiring in 10 more states. Four more states will curtail benefits by July 10.
The number of workers paid benefits through regular state programs fell 13.8% by the week ended June 12 from mid-May—when many governors announced changes—in states saying that benefits would end in June, according to an analysis by Jefferies LLC economists. That compares with a 10% decline in states ending benefits in July, and a 5.7% decrease in states ending benefits in September. Workers on state programs would lose the $300 weekly federal enhancement but could continuing receiving the state benefits.
Jefferies also found somewhat larger decreases in the number of people receiving benefits through pandemic programs in states curtailing benefits, though the data lags behind by an additional week. In many cases, those recipients will be cut off entirely when their state ends participation in the federal programs.
There’s much more data to come, and it will be worth paying attention to what industries see the most benefit.
But until then, this real-time experiment in incentives is beginning to show that companies were competing against government for manpower – with government paying more for people to stay on the sidelines.