Ending Unemployment Insurance State Benefits Caused An Increase in Job Searches

African man browsing work opportunities online using job search computer app, black jobless seeker looking for new vacancies on website page at laptop screen, recruitment concept, rear close up view.
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Nearly half of all states are ending the federal unemployment benefit, many of them citing a surplus of job vacancies and not enough people to fill them.

See: How To Go Back To Work And Still Keep Unemployment Benefits
Find: ‘Contagious Unemployment’ May Be to Blame as Companies Struggle to Find Workers

At the center of the debate is whether or not continued unemployment benefits are incentivizing people to stay at home rather than look for work. The New York Times cited research that shows there does appear to be a relationship between vaccinations of people and a rise in their employment rate. This seemingly stems from a reluctance to re-enter the workforce due to fears of the ongoing pandemic, however the research cited states that in areas where vaccinations increased, so did job seeking.

The White House added that the lack of available childcare contributed to women’s re-entry into the workforce. Childcare centers all over the country closed down during the pandemic, leaving the brunt of childcare in mothers’ hands, which has made it more difficult for them to return to work while vaccinations and re-openings are still taking place.

New data from career site Indeed suggests that unemployment benefits play a larger role than previously thought.

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The federal unemployment benefit is scheduled to end on September 6, but 23 states have decided to cut them before the end of the summer. These benefits include a $300 weekly payment on top of the standard state unemployment insurance. This means that for those who live in states who have decided to end it, their unemployment check could now be cut in at least half.

News of the cut benefit has been growing for the past couple of weeks, and Indeed reports that in May, job search activity on their site increased, relative to the national trend, in states that announced they would end federal unemployment benefit prematurely. They add that a state’s “share of national clicks on job postings was nearly 5% higher on announcement day relative to a baseline of the last two weeks of April.”

This increase was temporary, vanishing by the eighth day after the announcement they continued.

See: Labor Shortage Has Restaurant Owners Unable to Pay Rent, New Survey Says
Find: Despite Sign-On Incentives, Restaurants Are Struggling to Find Workers

The increase was greatest for “marketing, sales and hospitality & tourism jobs.” These sectors were some of the hardest-hit during the pandemic and are also the sectors with business owners now complaining that they cannot find enough workers to fill a surplus of vacancies. This could suggest that unemployment benefits played an influential role in keeping these workers from actively searching for these roles. Search activity also rose for food prep by 3.8% on announcement days of UI termination, another sector desperately seeking new employees and claiming difficulty in finding them.

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Indeed will continue to track this data through the summer and added that a state’s announcement could also be seen as a “broader public signal about the availability of jobs and the state of the pandemic.” This suggest that the data could imply that people see the end to UI as a more definitive end to the pandemic and factors keeping them home.

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About the Author

Georgina Tzanetos is a former financial advisor who studied post-industrial capitalist structures at New York University. She has eight years of experience with concentrations in asset management, portfolio management, private client banking, and investment research. Georgina has written for Investopedia and WallStreetMojo. 

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