Report: Federal Unemployment Benefits Kept Millions From Returning To Work

Casey Harper (The Center Square).

According to a Wednesday report, the federal benefit increases that were made last year have perpetuated unemployment and prevented millions of Americans returning to work.

Texas Public Policy Foundation publishes The reportThe study evaluated federal assistance, including controversial $300 weekly federal unemployment payments. More than two dozen states opted out of the federal program before it was set to  expire last year, citing the elevated joblessness, while blue states largely continued to take the federal money.

The report found that “3 million more people stayed on unemployment in states that maintained the increase in benefits versus the states that ended the program early.”

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“The takeaway is not just that some states improved their employment numbers and some didn’t,” the report’s author, E.J. Antoni, said. “It’s that extending unemployment benefits had a significant negative impact on the ability of communities to recover from the pandemic. Lives and livelihoods were put on hold for a much longer period than was necessary as a result of this wrong-headed policy.”

While the weekly unemployment payments wouldn’t be sufficient to provide for all Americans, combined with state unemployment, stimulus check, and many other programs state and federal, they made it more attractive to stay home than to return to work for millions.

“Even at higher incomes, the supplemental benefits, in conjunction with other government programs and payments, provided the equivalent of a $100,000 annual income for a family of four in 19 states and the District of Columbia,” Antoni said.

Although federal unemployment payments were ended in September last year, many states left earlier. According to the report, employment in states refusing federal funding increased by over 2 million.

Antoni said the federal programs “created a considerable disincentive for many people to return to work or even to continue working an existing job.”

Critics also highlight the widespread fraud and abuse committed while the federal funds were being distributed. The Government Accountability Office found that the states and territories paid $12.9 billion more in unemployment benefits in the initial year of the pandemic (April 2020 to March 2021).

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Congress gave the Department of Labor $2 billion to prevent the waste and fraud, but it did not stop the rampant waste uncovered by the government watchdog’s report.

“The American Rescue Plan Act of 2021, enacted March 11, 2021, subsequently provided DOL with $2 billion to detect and prevent fraud, promote equitable access, and ensure the timely payment of UI benefits,” the report says. “As of May 20, 2021, DOL officials said that DOL was working to develop detailed plans for this $2 billion in coordination with the Office of Management and Budget, and noted that developing spending plans across 53 states and territories involves complex considerations.”

The Center Square permission granted this syndicated version.