Economy

Ending Unemployment Didn’t Help GOP State Economies

SK Ashby
Written by SK Ashby

Enhanced unemployment benefits included in coronavirus relief legislation will expire in September, but benefits already expired many states with Republican governors who chose to decline the federal government's help.

Without citing any evidence at all, GOP governors asserted that enhanced unemployment benefits were preventing people from returning to work, but we have evidence that suggests it made no difference.

According to Moody's Analytics, there's "no evidence" that exiting the enhanced program early made a material difference in employment.

"There's no sign of the end of supplemental UI" affecting employment, said Mark Zandi, chief economist at Moody's Analytics. "There's just no evidence."

Georgia, Louisiana, Texas and West Virginia experienced a 0.3 percent fall in unemployment, while Nebraska, Oklahoma, Tennessee and Wyoming all saw a 0.2 percent decline, according to the Bureau of Labor Statistics data. All except Louisiana and Tennessee cut off emergency unemployment insurance in June. (Louisiana ended benefits on July 31, while Tennessee ended them July 3.)

"It would show up in the July data," Zandi said. "But the increase in jobs in July is no different from the increase in jobs in June. In fact, it's a little bit less."

Some states that accepted enhanced benefits for as long as congressional Democrats intended actually saw declines in unemployment greater than the states that withdrew from the program in June.

While ending the benefits did not make a significant difference in most states, it did lead to a 20 percent drop in consumer spending where benefits were allowed to expire.

"There's a pretty minimal impact in terms of people going back to work, and a much more significant impact in terms of loss of income and consequent drops in spending," said Rachel Deutsch, director of worker justice campaigns at the progressive Center for Popular Democracy.

I can't imagine this will surprise anyone, but it goes to show you that you should never take it at face value when a Republican asserts an economic truth. They're almost always wrong.

It's not a coincidence that the delta variant of the coronavirus is primarily surging in the same states that declined the benefits.