Studies Find No Link Between Enhanced Unemployment Benefits and any “Worker Shortage”


“Employers enjoy no statutory or constitutional right to cheap labor, period. It is a FACT wages have remained stagnant since the seventies while corporate profits have risen by orders of magnitude. Why are employers complaining about not having cheap labor ON DEMAND? Welcome to Capitalism! Capitalism works BOTH WAYS, not just for the employer.”

A great majority of Americans SUPPORT enhanced unemployment benefits.

“We find no evidence to support concerns about adverse aggregate labor supply effects of expanded UI generosity in the context of the current pandemic.”
Yale University Study: Employment Effects of Unemployment Insurance Generosity During the Pandemic

Aggregate Employment Effects of Unemployment Benefits During Deep Downturns: Evidence from the Expiration of the Federal Pandemic Unemployment Compensation

“The expiration of the temporary $600 boost to weekly UI benefits under the Federal Pandemic Unemployment Compensation (FPUC) led to a sharp, unprecedented, 98 percentage point reduction (on average) in the replacement rate during a time when employment was recovering during the Covid recession. Leveraging the considerable variation in this drop across states, I use a difference-in-differences event study design to estimate the macro employment effects. I find little impact of job gains from the benefit reduction, especially when I focus on groups (non-college graduates, and those from non-high-income households) that comprise of most UI recipients. The estimates rule out job gains implied by much of the micro UI duration elasticities from the existing literature.” Arindrajit Dube, University of Massachusetts

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During the COVID-19 pandemic, many businesses had to close and unemployment skyrocketed. To help the unemployed, the CARES Act increased US unemployment benefits by $600 a week, which increased unemployment benefit replacement rates (benefit/wage) to unprecedentedly high levels, above 100% for many workers. We investigate the state of the labor market during the COVID-19 crisis, using job applications and vacancy listings by occupation, state and industry from the online platform Glassdoor. We document two new facts. First, applications-per-vacancy were higher during the COVID-19 crisis than before. This is because job vacancies decreased by 64% during the crisis, while job applications only decreased by 21%. Job applications decreased before the CARES Act, and remained relatively stable until June 2020. Second, applications and applications-per-vacancy were slightly lower in occupation-states with a larger increase in the replacement rate after the CARES Act, but these differences are not entirely explained by the CARES Act. Overall, our evidence suggests that employers did not experience greater difficulty finding applicants for their vacancies after the CARES Act, despite the large increase in unemployment benefits.