New Study Finds Expanded Jobless Benefits Don't Reduce Employment
AILSA CHANG, HOST:
Democrats and Republicans have more than an aisle separating them when it comes to passing a new coronavirus relief package. The parties are miles apart on how to help people who've lost their jobs. House Democrats want to renew a $600 per week unemployment benefit, but Republican senators say that benefit discourages people from going back to work.
(SOUNDBITE OF MONTAGE)
MITCH MCCONNELL: For weeks now, it's been clear to a majority of Americans that we should not pay people more to stay home than we pay people who continue working.
RON JOHNSON: We are creating a very perverse incentive for people to remain unemployed when our economy is calling for more workers.
TIM SCOTT: Our nation is built on the dignity of work.
CHANG: Well, a new study from Yale University looked into these claims, and the lead author of that report joins us now. Dana Scott, welcome.
DANA SCOTT: Thanks so much for having me on.
CHANG: So just in a few sentences, can you give us the top line from your study?
D SCOTT: Sure. So there's been a lot of talk recently about how this extra $600 of unemployment benefits per week under the CARES Act replaces more than 100% of income for the median worker, and it's been argued that this incentivized employers to lay people off and is now disincentivizing people from returning to work. So our study aims to test whether this is actually happening, and we find that people who are eligible for more generous benefits were actually no more likely to be laid off and no less likely to return to work than others in our study.
CHANG: There's no arguing with the fact that some people have made more money not working than they would have at work, yeah?
D SCOTT: Certainly that's true. But the main finding of our study is not to imply that nobody is making that specific decision or deciding to search for work less intensely than they otherwise might because they're getting pretty good benefits on employment. But the main takeaway is actually that there are much more important reasons than this for why people aren't going back to work.
CHANG: Yeah. Let's talk about those reasons. Why are people not actively looking for work right now, especially during this time?
D SCOTT: So the most important one is just that there's a lot of slack in labor demand in the economy right now, and job prospects simply aren't there in the way they were before the pandemic hit. So even if we took away benefits and forced people to have to go out and search a lot more intensely for jobs, it wouldn't necessarily mean that they would actually find those jobs. And that's because there's still a really, really severe public health situation. So a lot of employers simply aren't hiring or are hiring a lot fewer employees, and so there are just a lot fewer jobs to go around.
D SCOTT: And even on top of that, there's also a lot of concerns for workers who are considering whether or not to go back to work because the kinds of people in our dataset - they have to do their jobs in person. So they're exposing themselves to a lot of public health risks by going into work and also incurring the costs of child care that are now even higher than they were before the pandemic.
CHANG: Yeah. Well, you know, this argument that more unemployment benefits give people the incentive not to look for work - I mean, we've heard it in the past. It's become a focal point of these negotiations among lawmakers right now. What do you make of the fact that we keep hearing this argument?
D SCOTT: For a lot of people, the intuitive logic of it makes sense. But when you look at the actual data, it doesn't really show up as an important factor because it's just dwarfed by much more important reasons for why people aren't going back to work. So I think it's very easy to look at the two wages people would earn on unemployment versus at work and compare them and say, of course people are going to stay home. But you have to factor in all of these other important economic factors that are driving people's decisions in order to understand what people's choice sets actually are.
CHANG: Dana Scott is a Ph.D. student at Yale University and the lead author of a new report on the effects of federal unemployment benefits. Thanks very much for joining us today.
D SCOTT: Thanks again for having me on.
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