WASHINGTON, Aug 21 — American states that ended pandemic jobless benefits early saw slight dips in unemployment rates but big declines in spending and income, according to a study released yesterday, in what could be a preview of the effects nationwide when the programmes end completely.
But the federal aid has become controversial in recent months, as critics say it encourages people not to return to work even as Covid-19 vaccines became widely available and businesses struggle to fill open positions. Analysing data from 18,648 people who had received unemployment payments, the study found nearly 25 per cent had jobs at the end of July in 19 of the 22 states that ended extra benefits in June.However, the employment gains did not make up for the decline in incomes and spending that followed, according to the researchers from Columbia University, Harvard University, University of Massachusetts Amherst and University of Toronto.
However, unemployment benefits fell by US$278 a week and “the reduced income was accompanied by a US$145 per-week fall in spending.”As the aid ends nationwide, “We could see around US$8 billion in reduced spending during September and October. The spending losses are likely to continue further as additional workers take time to enter the workforce,” they wrote.