More evidence that ‘enhanced’ unemployment benefits are holding back hiring

When I wrote in the Star Tribune in April that ‘enhanced’ unemployment benefits were one factor explaining the puzzle of record job openings coexisting with elevated levels of unemployment, not everyone agreed. One response claimed that I asserted:

…with no evidence that it is the increased unemployment benefits that are keeping workers at home. In at least two articles in the past few weeks the same assertion has been made, again with no evidence. Employers are quoted but not workers. 

Another argued that I claimed:

…that you can’t entice people to take jobs that pay less than unemployment benefits yet offers no data to support this.

…

Neither of us has any hard data to draw upon…

Over time, however, evidence has mounted that ‘enhanced’ unemployment benefits are one factor explaining the puzzle of record job openings coexisting with elevated levels of unemployment, just as I said.

A study from economists Jason Furman, Melissa Kearney and Wilson Powell III found that a lack of child care — one of the commonly offered alternative explanations for our puzzle — is not holding back employment. A survey by the U.S. Chamber of Commerce found that 16 percent of those unemployed not actively seeking work say the amount of money they are receiving from unemployment benefits and government programs makes it “not worth looking” for work and that 28 percent of survey respondents agree that “There are a lot of people who are not looking for work because they can do almost or just as well collecting unemployment benefits.”

And now another survey, asking the workers just as my respondent wanted, finds that ‘enhanced’ unemployment benefits are one factor explaining the puzzle of record job openings coexisting with elevated levels of unemployment.

A poll published yesterday by Morning Consult finds that more than 1.8 million unemployed Americans have turned down jobs over the course of the pandemic because of the generosity of unemployment insurance benefits.

Of those surveyed who were actively collecting unemployment benefits, 29 percent said they had turned down job offers during the pandemic and among these 45 percent cited the generosity of the benefits “as a major reason why they did not accept the job offer.” With 14.1 million Americans collecting unemployment benefits as of the week ending June 19, Morning Consult estimated that 1.84 million Americans had passed on a job due to unemployment benefits during the pandemic.

None of this is a dig at those people. As I wrote in April:

If unemployment insurance offers people an income comparable to working — or even greater — many of them will quite sensibly opt not to work.

But as the economy recovers from COVID-19 and the government responses to it, it is past time to end these ‘enhancements’.