Job searches fell in states canceling unemployment benefits early

·4 min read

The move by many states to cancel pandemic-era unemployment programs early to spur hiring doesn’t appear to be working, according to one metric.

Job seekers in states that will eliminate those programs over the next week haven’t accelerated their online searches for new jobs, new data from Indeed found. In fact, job searches have actually fallen off in those states.

"We're not seeing an increase in relative search activity in states where those opt-outs begin to take effect," Jed Kolko, Indeed’s chief economist, told Yahoo Money. "In those states, there's actually been a decline in relative search activity."

Job search activity ahead of unemployment benefits cut off. Source: Indeed
Job search activity ahead of unemployment benefits cutoff. Source: Indeed

Twenty-five GOP-led states plan to opt out of federal unemployment programs this month — including the popular $300 weekly bonus — with cutoff dates for 10 states coming between June 12 and 19.

Alaska, Iowa, Mississippi, and Missouri are the first four states to cancel the programs beginning June 12. Job search activity in those states increased in mid-May after they announced plans to cancel the programs, rising 4% from the baseline national job search level in late April. But search activity fell back quickly and is now down 4% from those levels.

Read more: Can your employer force you to get vaccinated? Sometimes.

Idaho, Indiana, Nebraska, New Hampshire, North Dakota, and Wyoming are part of the second wave of states canceling benefits on June 19. Similarly, job search activity there also ticked up by 1% after the states’ announcements, but is now down 2% from its pre-announcement levels.

YF Plus
YF Plus

"If there were an increase in relative search activity because of unemployment benefits ending, you would expect to see a bigger increase [in search activity] in the states cutting those benefits off sooner," Kolko said.

Several studies have found that the extra pandemic-era unemployment benefits largely don’t keep workers from accepting new jobs — most recently a paper by the Federal Reserve Bank of San Francisco. If seven out of 28 unemployed workers received job offers they would normally accept, only one declined because of the extra $300 in weekly unemployment benefits, the paper found.

Read more: How to negotiate your first salary

"It's unclear how important the UI benefits are," Kolko said. "Other factors like continuing concerns about getting the virus, the burden of child care and other caregiving responsibilities, and other factors may also be holding people back."

LOS ANGELES, CALIFORNIA - APRIL 22: A man wearing a mask walks past a
A man wearing a mask walks past a "now hiring" sign on Melrose Avenue amid the coronavirus pandemic on April 22, 2021 in Los Angeles, California. (Photo by Alexi Rosenfeld/Getty Images)

‘There's nothing for you from the state program’

The move to cancel federal programs early gained steam among Republican governors following April's disappointing jobs report. House Republicans including House Republican Leader Kevin McCarthy (R-CA) urged all GOP governors to opt out of the federal programs in a letter earlier in May. Massachusetts and Vermont are the only states with GOP governors that have not yet canceled the federal programs.

Twenty of the 25 states are getting rid of all federal unemployment programs, including the Pandemic Unemployment Assistance (PUA) for workers who don’t normally qualify for benefits and the Pandemic Emergency Unemployment Compensation (PEUC) that provides extra weeks of benefits. 

Alaska, Arizona, Florida, Ohio, and West Virginia are only pulling out of the extra $300 weekly supplement.

This content is not available due to your privacy preferences.
Update your settings here to see it.

The federal programs are set to expire on September 6.

Around 4.5 million workers in those 25 states stand to collectively lose $25.2 billion in benefits, averaging out to potentially thousands of dollars per worker, according to an analysis by the Century Foundation.

"By pulling out these benefits in those states, there's basically nothing there for most people," Andrew Stettner, an unemployment insurance expert and senior fellow at the Century Foundation, told Yahoo Money. "The state benefits only last as much as 26 weeks. In some states, it lasts even less. So if you lost your job last year, there's nothing for you from the state program."

Yahoo Money sister site Cashay has a weekly newsletter.
Yahoo Money sister site Cashay has a weekly newsletter.

Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova

Read more:

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and Reddit.