President Biden supports ongoing, COVID-related enhanced federal jobless benefits, an extra $300 weekly on top of baseline unemployment payments. As the pandemic subsides, this leaves many businesses, particularly restaurants and hotels, struggling to fill openings. Businesses attribute hiring difficulties to extra unemployment payments, leading half of all states (as of early June) to end enhanced payments prior to their expiration in early September 2021. 

Biden defended extra unemployment benefits saying there was no “measurable” evidence it increased unemployment, but that workers rejected jobs because of COVID-19 school and daycare closures. Yet even left-leaning economists such as Jason Furman, a Harvard professor who chaired President Obama’s Council of Economic Advisers, disagreed, reporting “employment declines among parents of young children are not a driver of continuing low employment levels.”

Parents of young children are not the ones causing the spike in unemployment rates, easy unemployment money is, and most Americans agree. According to May 2021 polling by Harvard University with HarrisX, an overwhelming 76 percent of Americans said people are “staying on unemployment because they can make more money.” Only 24 percent of Americans say “that is not the case.”  Fifty-four percent of Americans said extra unemployment benefits should end in July 2021, while just 31 percent said they should continue until Labor Day, and 18 percent said benefits should extend to January 2022.

There is no “measurable” evidence that extra unemployment benefits increased unemployment.
-President Joe Biden, May 7, 2021

Mostly false or misleading. Significant errors or omissions. Mostly make believe.

Unemployment insurance benefits initially increased in the CARES Act by $600 per week, and the law broadened eligibility for unemployment insurance to include the self-employed, those seeking part-time employment, and those who otherwise would not be eligible. The extra weekly $600 benefit ended July 2020, but Congress later revived it at a reduced $300 per week rate on top of baseline unemployment payments. These generous benefits and stimulus payments are beginning to work against the goal of returning workers to the labor force. 

Despite the economy adding jobs as vaccinations increased and COVID-19 subsided, the unemployment rate ticked up 0.1 percentage point in April 2021 to 6.1 percent. Though it decreased in May 2021 to 5.8 percent, the Bureau of Labor Statistics reported a record high of 8.1 million on the last business day of March (most recent data available). Nearly half of small business owners reported unfilled job openings in May, according to the National Federation of Independent Business, a record high and 26 points higher than the decades-long average of 22 percent.

Policymakers should not use COVID-19 emergency tools to create permanent employment disincentives that distort employment markets, are magnets for fraud and risk triggering inflation. Yet Biden supports these ongoing, COVID-related enhanced federal jobless benefits, an extra $300 weekly on top of baseline unemployment payments. 

Rather than punish work or reward unemployment, policymakers should embrace tools that encourage work to increase economic mobility for more Americans without triggering unintended consequences that may stall our overall economic rebound.

Read more here at our June Policy Focus,“Public Policies Should Reward Work, Not Compete With It.”