Job Search Activity Rises in States Reducing Unemployment Benefits

Initial data shows a mild but notable uptick in job search activity following states' announcements to cut boosted unemployment ahead of schedule.

Though the U.S. unemployment rate has declined substantially since reaching a record high in April of 2020, new weekly jobless claims are still coming in at about twice the rate they were before the pandemic began. In spite of that, some states have actually been experiencing a labor shortage, and some lawmakers attribute it to the fact that people on unemployment may not be motivated to get back into the workforce.

Since the pandemic began, weekly unemployment benefits have been temporarily increased. Initially, the CARES Act, which was signed into law in March of 2020, allowed for a $600 weekly increase. Most recently, the American Rescue Plan boosted jobless benefits by $300 a week through early September.

Over the past several weeks, however, individual states have announced that they'll be ending those boosted benefits well ahead of the September deadline. In fact, as of now, there are 24 states that will be pulling the plug on that extra $300 a week. Lawmakers are hoping that by killing that boost, it will push more jobless people to go out and seek work. And so far, data indicates that this strategy, though harsh, may be effective -- but only to a point.

Job searches are up in states pulling benefits

The threat of losing boosted unemployment benefits has prompted some workers to look for jobs. Specifically, data from job site Indeed reveals that job searches increased by 5% the day each state announced its plans to end boosted unemployment early.

That said, that uptick was short lived, and it came to an end eight days after each state's respective unemployment announcement. Now part of that could stem from the fact that some jobless people were able to find work quickly. But for others, it could be that they faced the same challenges they did before those announcements were made.

While those extra unemployment benefits may be the thing keeping some jobless workers out of the labor force, for many people, there are other constraints. Not everyone has gotten a COVID-19 vaccination, for example, as certain health conditions may be forcing some would-be recipients to wait. That could explain some people's hesitation to return to a job.

There's also childcare, or a lack thereof, to think about. Many schools still aren't back to their usual in-person learning schedule, and in the absence of that, it may not make financial sense for some lower-wage earners to work.

Not only do jobless people stand to lose their $300 weekly unemployment boost as early as June (in some states), but some gig workers and self-employed people who are collecting benefits through emergency pandemic programs may lose that income stream entirely. And those who don't have savings to fall back on could be in for a long, tough road.

A recent poll by Quinnipiac University revealed that 54% of Americans think state lawmakers are right to pull boosted unemployment ahead of schedule. But whether that ultimately does the trick in solving local labor shortage issues is yet to be determined.