5 ms·

Unemployment declining faster in states that are cutting off $300 benefits

62 points by awb 5y ago

celticninja 5y ago
Is this because more people are returning to work or are they no longer counted as unemployed by the metric that is being used?
- mc32 5y ago
  It appears to be the former: "The number of individuals who received unemployment benefits decline[d] by 13.8% by the week ending June 12, compared to mid-May, in states where governors explicitly said that enhanced benefits would end in June, based on an analysis by Jefferies LLC economists." and: "In May, the Missouri's unemployment rate was 4.2%, below the national average of 5.8%, according to data from the Department of Labor. Missouri ended enhanced federal benefits for unemployed state residents as of June 12, making it one of the first states to take the action."
  - celticninja 5y ago
    That seems to be the latter not the former.
  - kadoban 5y ago
    Is a decline in the number of people who are receiveing unemployment benefits the same thing as an increase in the number returning to work? I don't actually think it is without more data to rule out other cases.
    - riffraff 5y ago
      Employment rate is not "1-unemployment", there is a third component ("inactive" or something like that) so generally they're correlated but do not coincide. I do not know the exact numbers for this.
      - kadoban 5y ago
        Right, that's my understanding as well. There's actually _many_ different unemployment numbers, depending on what definition of employment vs not vs not even included that you want to use. The "unemployment number" without qualification we tend to use is (IMO) kind of crap, but we're stuck with it for tradition mostly as far as I can tell. https://www.bls.gov/news.release/empsit.t15.htm https://www.bls.gov/news.release/empsit.t15.htm seems to be the best resource I can find at the moment for the ones I'm thinking of, it doesn't really define them very exactly though. I'm sure they're defined _somewhere_.
- dingusthemingus 5y ago
  Fed govt set aside cash during covid pandemic to give extra funds to people on unemployment. At the beginning of the pandemic all the states particapated, but not anymore. Critics have accused the fed govt of irresponsibly rolling this out as the economy has rebounded, and now you have many states where businesses are struggling to find workers who want to apply for these low income jobs because unemployment + 300$(fed govt bonus) + tax benfifits > low income job. So basically 21 states stopped giving unemployed people that extra 300$, and surprise surprise, american workers are rational and more of them elected to go back to work compared to the states that still distribute that 300$. Basically this isnt surprising, but people on the far right want to gut bloated unemployment programs and far left wants universal income + bigger welfare for nonemployed americans, and this is playing out in Washington DC now and in states accross the US who arent one party states. There are a number of reasons why someone loses unemployment eligbability, time being one of those as you alluded to. Varies state by state. I beleive some states like NY and Cali have extended unemployment benfifits to like September, other states probably vary.
  - lumost 5y ago
    The economics of this situation are pretty complex. The short-term benefits may also be forcing employers to raise long-term wages to compensate. The long-term wage increases for low-income jobs may result in lower usage of other government programs such as food stamps, and housing assistance. I passed by a giant sign next to a McDonalds offering $17/hr starting wage for McDonald's employees at a roadside operation in Western Mass.
    - nerdponx 5y ago
      And that's $17/hr * 40hrs * 50weeks = $34,000 / year. A single person could be comfortable on that kind of money, but they won't exactly living the luxury life either. I think that's a pretty reasonable baseline for a full-time-employed resident of the USA.
      - fzzzy 5y ago
        You're just missing one thing -- there is no way in hell mcdonalds will ever give you 40 hours a week.
- pkaye 5y ago
  Unemployment rates are determined based on surveys of 60000 households every month. Its not based on qualifying for unemployment benefits. https://www.bls.gov/cps/cps_htgm.htm#where https://www.bls.gov/cps/cps_htgm.htm#where
  - schuyler2d 5y ago
    However, you have to say you're looking for work to count as unemployed. If I get $300 to say so, then I might say I'm looking for work (and genuinely look for it) -- but if I no longer get any benefit (or much less) from saying so, then I might not bother with all the (tedious paternalist) paperwork to get counted as 'unemployed'
    - pkaye 5y ago
      > but if I no longer get any benefit (or much less) from saying so, then I might not bother with all the (tedious paternalist) paperwork to get counted as 'unemployed' AFAIK there is no paperwork for this survey. They call people up and ask a few questions to classify you.
nytesky 5y ago
S o why does NYT imply that it has not? I can’t see WSJ source so any insight? https://www.nytimes.com/2021/06/27/business/economy/jobs-workers-unemployment-benefits.html https://www.nytimes.com/2021/06/27/business/economy/jobs-wor...
- username90 5y ago
  That NYT uses secondary metrics like clicks on a website. Pretty strong evidence that the primary metrics (how many people actually work) doesn't go in their favour. The business insider talks about unemployment, not exactly the same thing as how many are working but it is a way better metric than website clicks or anecdotes.
barrenko 5y ago
Econ is tough.
runbathtime 5y ago
If you are remote living in Texas but working for a company in CA, do you get the unemployment if CA has the benefits, but Texas does not?
- collectedparts 5y ago
  IANAL but my understanding is that companies have to register to do business in each state that they want to employ remote workers in. So if you're a Texas resident, the CA company would have had to register in Texas to have you on payroll, and that relationship would be governed by Texas law. Of course if you kept your driver's license in CA and just happen to physically be in Texas without telling your employer that, then it'd be CA.
  - paulcole 5y ago
    > So if you're a Texas resident, the CA company would have had to register in Texas to have you on payroll, and that relationship would be governed by Texas law. I don’t think this is fully correct. My understanding is that it’s about where the work is being done, not the residency. For example, many businesses in Portland, OR employ residents of Vancouver, WA (right across the river). When COVID hit and those WA residents became remote employees, many Portland businesses had to become registered in WA because that is now where they had employees located.
    - runbathtime 5y ago
      I'm confused by unemployment. Doesn't the company essentially pay it? The employee also gets taxed when their paycheck is deducted for unemployment insurance every month. Did they get this money back if they never use it? We know the state gov is involved somehow, because they extended programs, but how? I can't figure out if it is the company, yourself or the state, or a mix of all three involved in unemployment. And does it make sense to use the state you physically live in or the state where the company is? I think with remote work and different states offering different amounts, this can all be gamed for maximum benefits.
rejectedandsad 5y ago
Would have been smart to taper it or provide it as a lump sum bonus rather than cut off or keep until September.
cratermoon 5y ago
"States cutting off unemployment benefits are forcing poor people back to low-paying jobs" FTFY
- splistud 5y ago
  You fixed a statement of fact with an assumption?
- 6gvONxR4sf7o 5y ago
  This seems like a really inflamatory framing. We're all forced to work jobs. But that seems like an inevitable fact until we can automate enough so that there's such a thing as a free lunch. And poor people are the ones with low paying jobs, but that's more of a tautology than an indictment.
  - lumost 5y ago
    At face value the above reads like a common sense statement about the world we live in. However more practically there are a number of deeper economic considerations that don't have clear cut answers such as "How much human capital is consumed by low productivity enterprises leveraging the immobility/lack of choice present in impoverished workers? If workers had mobility/safety would they move to higher productivity work?" "Should the minimum wage for workers be equal to the wage where the government doesn't need to provide benefits? If it's not, why does the government subsidize low productivity employers?" Labor prices only exist in a free market so long as there are sufficient regulations to prevent exploitative labor arrangements and starvations. Theoretical arguments centered on bid/ask spreads don't quite apply in a world where there are life and death consequences to the market not clearing.
    - bitshiftfaced 5y ago
      > "Should the minimum wage for workers be equal to the wage where the government doesn't need to provide benefits? If it's not, why does the government subsidize low productivity employers? I'm not sure I follow. How does the government "subsidize low productivity employers"? What does "low productivity" employers/work even mean?
swiley 5y ago
>People being told to go back to work or face homelessness are going back to work. Shocking.
- benjohnson 5y ago
  Keeping me and my family from a horrible death is good enough motivation for me to keep working. And that's ok. When I work, I also provide value for others and they give me valuable things in return - like money for food.
  - charwalker 5y ago
    What if you were treated with the decency to not risk a horrible death because a politician's side paycheck is determined by how cheap a companies workers could be paid?
    - newfriend 5y ago
      Does being "treated with decency" mean "giving people free money to not work" to you? Is it indecent to expect people to work to pay for things?
      - mplewis 5y ago
        We don’t expect everyone to work to pay for things. If you have enough money in a market account, you never have to work again. Why the double standard?
        newfriend 5y ago
        If you were able to get that much money, then you provided enough value to get that amount. When people say "work" what they mean is "provide value". No double standard.
    - splitstud 5y ago
      What if you understood the scale of the things you were talking about? Would you still cling to your belief system?
gotoeleven 5y ago
It's funny when people act surprised that other people respond to incentives. Of course if you pay people to not work they will not work. If you don't pay them unless they work, they will work. Do we have to relearn this lesson after every round of left wing economic interventionism?
totalZero 5y ago
Unemployment metrics measure those people who are receiving benefits, which is not a perfect proxy for people who lack jobs. It would make sense that people go to less effort to maintain benefits when the payoff becomes substantially smaller.
vanusa 5y ago
And so are wages. Is that a good thing?
wbsss4412 5y ago
People in the comments seem to not be reading the article, there’s a lot of back and forth about whether the article is looking at the overall unemployment rate or just those receiving benefits. > The number of individuals who received unemployment benefits decline by 13.8% by the week ending June 12, compared to mid-May, in states where governors explicitly said that enhanced benefits would end in June, based on an analysis by Jefferies LLC economists. >This figure compares to a 10% decline in states that are ending benefits in July, and a smaller 5.7% decline in states that intend to keep the benefits until the funding ends in September. As we can see it’s referring to unemployment claims, not the overall rate. So we don’t know whether people are workin or not. That said, I would suspect that it is indeed due to more people going back to work. But there is again another reference to that in the article: > In May, the Missouri's unemployment rate was 4.2%, below the national average of 5.8%, according to data from the Department of Labor. Missouri seems to have been back to more or less full employment, or around there when it cut off the extra benefits. What i think a lot of people are missing is that the confounding factor here is that political choices like ending the extra benefit are correlated with lighter lockdown policies. It’s likely that these states have already been ahead on re opening as well. measuring the effect of ending the unemployment benefits themselves requires looking at that data as well.
charwalker 5y ago
I'd like to see this side by side with poverty, homeless, etc rates. I cannot see this practice improving long term outcomes, economic or health wise. I think this article also dismisses that even if there are millions of job openings that doesn't mean they pay a living wage or a wage that can sustain a family or prepare for retirement. Coming out of 2008 we lost a ton of reasonable pay positions for multiple part time or gig economy work that crushed so many of my college peers. Simply driving down unemployment is a false method of tracking economic progress or recovery. Roberson's story at the end is exactly what I'm getting at. Lose a reasonable $26/hour and now stuck with a $7.25/hour job at best is not going to help America recover but only demonstrate employers can lobby to abuse workers all day long.
DobryMorozov 5y ago
They are simply not reporting themselves as unemployed because there's no money. It doesn't mean that they found a job

62 points by awb 5y ago

Is this because more people are returning to work or are they no longer counted as unemployed by the metric that is being used?

mc32 5y ago
It appears to be the former: "The number of individuals who received unemployment benefits decline[d] by 13.8% by the week ending June 12, compared to mid-May, in states where governors explicitly said that enhanced benefits would end in June, based on an analysis by Jefferies LLC economists." and: "In May, the Missouri's unemployment rate was 4.2%, below the national average of 5.8%, according to data from the Department of Labor. Missouri ended enhanced federal benefits for unemployed state residents as of June 12, making it one of the first states to take the action."
- celticninja 5y ago
  That seems to be the latter not the former.
- kadoban 5y ago
  Is a decline in the number of people who are receiveing unemployment benefits the same thing as an increase in the number returning to work? I don't actually think it is without more data to rule out other cases.
  - riffraff 5y ago
    Employment rate is not "1-unemployment", there is a third component ("inactive" or something like that) so generally they're correlated but do not coincide. I do not know the exact numbers for this.
    - kadoban 5y ago
      Right, that's my understanding as well. There's actually _many_ different unemployment numbers, depending on what definition of employment vs not vs not even included that you want to use. The "unemployment number" without qualification we tend to use is (IMO) kind of crap, but we're stuck with it for tradition mostly as far as I can tell. https://www.bls.gov/news.release/empsit.t15.htm https://www.bls.gov/news.release/empsit.t15.htm seems to be the best resource I can find at the moment for the ones I'm thinking of, it doesn't really define them very exactly though. I'm sure they're defined _somewhere_.
dingusthemingus 5y ago
Fed govt set aside cash during covid pandemic to give extra funds to people on unemployment. At the beginning of the pandemic all the states particapated, but not anymore. Critics have accused the fed govt of irresponsibly rolling this out as the economy has rebounded, and now you have many states where businesses are struggling to find workers who want to apply for these low income jobs because unemployment + 300$(fed govt bonus) + tax benfifits > low income job. So basically 21 states stopped giving unemployed people that extra 300$, and surprise surprise, american workers are rational and more of them elected to go back to work compared to the states that still distribute that 300$. Basically this isnt surprising, but people on the far right want to gut bloated unemployment programs and far left wants universal income + bigger welfare for nonemployed americans, and this is playing out in Washington DC now and in states accross the US who arent one party states. There are a number of reasons why someone loses unemployment eligbability, time being one of those as you alluded to. Varies state by state. I beleive some states like NY and Cali have extended unemployment benfifits to like September, other states probably vary.
- lumost 5y ago
  The economics of this situation are pretty complex. The short-term benefits may also be forcing employers to raise long-term wages to compensate. The long-term wage increases for low-income jobs may result in lower usage of other government programs such as food stamps, and housing assistance. I passed by a giant sign next to a McDonalds offering $17/hr starting wage for McDonald's employees at a roadside operation in Western Mass.
  - nerdponx 5y ago
    And that's $17/hr * 40hrs * 50weeks = $34,000 / year. A single person could be comfortable on that kind of money, but they won't exactly living the luxury life either. I think that's a pretty reasonable baseline for a full-time-employed resident of the USA.
    - fzzzy 5y ago
      You're just missing one thing -- there is no way in hell mcdonalds will ever give you 40 hours a week.
pkaye 5y ago
Unemployment rates are determined based on surveys of 60000 households every month. Its not based on qualifying for unemployment benefits. https://www.bls.gov/cps/cps_htgm.htm#where https://www.bls.gov/cps/cps_htgm.htm#where
- schuyler2d 5y ago
  However, you have to say you're looking for work to count as unemployed. If I get $300 to say so, then I might say I'm looking for work (and genuinely look for it) -- but if I no longer get any benefit (or much less) from saying so, then I might not bother with all the (tedious paternalist) paperwork to get counted as 'unemployed'
  - pkaye 5y ago
    > but if I no longer get any benefit (or much less) from saying so, then I might not bother with all the (tedious paternalist) paperwork to get counted as 'unemployed' AFAIK there is no paperwork for this survey. They call people up and ask a few questions to classify you.

nytesky 5y ago

S o why does NYT imply that it has not? I can’t see WSJ source so any insight? https://www.nytimes.com/2021/06/27/business/economy/jobs-workers-unemployment-benefits.html https://www.nytimes.com/2021/06/27/business/economy/jobs-wor...

username90 5y ago
That NYT uses secondary metrics like clicks on a website. Pretty strong evidence that the primary metrics (how many people actually work) doesn't go in their favour. The business insider talks about unemployment, not exactly the same thing as how many are working but it is a way better metric than website clicks or anecdotes.

barrenko 5y ago

Econ is tough.

runbathtime 5y ago

If you are remote living in Texas but working for a company in CA, do you get the unemployment if CA has the benefits, but Texas does not?

collectedparts 5y ago
IANAL but my understanding is that companies have to register to do business in each state that they want to employ remote workers in. So if you're a Texas resident, the CA company would have had to register in Texas to have you on payroll, and that relationship would be governed by Texas law. Of course if you kept your driver's license in CA and just happen to physically be in Texas without telling your employer that, then it'd be CA.
- paulcole 5y ago
  > So if you're a Texas resident, the CA company would have had to register in Texas to have you on payroll, and that relationship would be governed by Texas law. I don’t think this is fully correct. My understanding is that it’s about where the work is being done, not the residency. For example, many businesses in Portland, OR employ residents of Vancouver, WA (right across the river). When COVID hit and those WA residents became remote employees, many Portland businesses had to become registered in WA because that is now where they had employees located.
  - runbathtime 5y ago
    I'm confused by unemployment. Doesn't the company essentially pay it? The employee also gets taxed when their paycheck is deducted for unemployment insurance every month. Did they get this money back if they never use it? We know the state gov is involved somehow, because they extended programs, but how? I can't figure out if it is the company, yourself or the state, or a mix of all three involved in unemployment. And does it make sense to use the state you physically live in or the state where the company is? I think with remote work and different states offering different amounts, this can all be gamed for maximum benefits.

rejectedandsad 5y ago

Would have been smart to taper it or provide it as a lump sum bonus rather than cut off or keep until September.

cratermoon 5y ago

"States cutting off unemployment benefits are forcing poor people back to low-paying jobs" FTFY

splistud 5y ago
You fixed a statement of fact with an assumption?
6gvONxR4sf7o 5y ago
This seems like a really inflamatory framing. We're all forced to work jobs. But that seems like an inevitable fact until we can automate enough so that there's such a thing as a free lunch. And poor people are the ones with low paying jobs, but that's more of a tautology than an indictment.
- lumost 5y ago
  At face value the above reads like a common sense statement about the world we live in. However more practically there are a number of deeper economic considerations that don't have clear cut answers such as "How much human capital is consumed by low productivity enterprises leveraging the immobility/lack of choice present in impoverished workers? If workers had mobility/safety would they move to higher productivity work?" "Should the minimum wage for workers be equal to the wage where the government doesn't need to provide benefits? If it's not, why does the government subsidize low productivity employers?" Labor prices only exist in a free market so long as there are sufficient regulations to prevent exploitative labor arrangements and starvations. Theoretical arguments centered on bid/ask spreads don't quite apply in a world where there are life and death consequences to the market not clearing.
  - bitshiftfaced 5y ago
    > "Should the minimum wage for workers be equal to the wage where the government doesn't need to provide benefits? If it's not, why does the government subsidize low productivity employers? I'm not sure I follow. How does the government "subsidize low productivity employers"? What does "low productivity" employers/work even mean?

swiley 5y ago

>People being told to go back to work or face homelessness are going back to work. Shocking.

benjohnson 5y ago
Keeping me and my family from a horrible death is good enough motivation for me to keep working. And that's ok. When I work, I also provide value for others and they give me valuable things in return - like money for food.
- charwalker 5y ago
  What if you were treated with the decency to not risk a horrible death because a politician's side paycheck is determined by how cheap a companies workers could be paid?
  - newfriend 5y ago
    Does being "treated with decency" mean "giving people free money to not work" to you? Is it indecent to expect people to work to pay for things?
    - mplewis 5y ago
      We don’t expect everyone to work to pay for things. If you have enough money in a market account, you never have to work again. Why the double standard?
      - newfriend 5y ago
        If you were able to get that much money, then you provided enough value to get that amount. When people say "work" what they mean is "provide value". No double standard.
  - splitstud 5y ago
    What if you understood the scale of the things you were talking about? Would you still cling to your belief system?

gotoeleven 5y ago

It's funny when people act surprised that other people respond to incentives. Of course if you pay people to not work they will not work. If you don't pay them unless they work, they will work. Do we have to relearn this lesson after every round of left wing economic interventionism?

totalZero 5y ago

Unemployment metrics measure those people who are receiving benefits, which is not a perfect proxy for people who lack jobs. It would make sense that people go to less effort to maintain benefits when the payoff becomes substantially smaller.

vanusa 5y ago

And so are wages. Is that a good thing?

wbsss4412 5y ago

People in the comments seem to not be reading the article, there’s a lot of back and forth about whether the article is looking at the overall unemployment rate or just those receiving benefits. > The number of individuals who received unemployment benefits decline by 13.8% by the week ending June 12, compared to mid-May, in states where governors explicitly said that enhanced benefits would end in June, based on an analysis by Jefferies LLC economists. >This figure compares to a 10% decline in states that are ending benefits in July, and a smaller 5.7% decline in states that intend to keep the benefits until the funding ends in September. As we can see it’s referring to unemployment claims, not the overall rate. So we don’t know whether people are workin or not. That said, I would suspect that it is indeed due to more people going back to work. But there is again another reference to that in the article: > In May, the Missouri's unemployment rate was 4.2%, below the national average of 5.8%, according to data from the Department of Labor. Missouri seems to have been back to more or less full employment, or around there when it cut off the extra benefits. What i think a lot of people are missing is that the confounding factor here is that political choices like ending the extra benefit are correlated with lighter lockdown policies. It’s likely that these states have already been ahead on re opening as well. measuring the effect of ending the unemployment benefits themselves requires looking at that data as well.

charwalker 5y ago

I'd like to see this side by side with poverty, homeless, etc rates. I cannot see this practice improving long term outcomes, economic or health wise. I think this article also dismisses that even if there are millions of job openings that doesn't mean they pay a living wage or a wage that can sustain a family or prepare for retirement. Coming out of 2008 we lost a ton of reasonable pay positions for multiple part time or gig economy work that crushed so many of my college peers. Simply driving down unemployment is a false method of tracking economic progress or recovery. Roberson's story at the end is exactly what I'm getting at. Lose a reasonable $26/hour and now stuck with a $7.25/hour job at best is not going to help America recover but only demonstrate employers can lobby to abuse workers all day long.

DobryMorozov 5y ago

They are simply not reporting themselves as unemployed because there's no money. It doesn't mean that they found a job