Tony Dejak/AP Photo
Economists are not finding evidence of increased employment in states that cut benefits early.
About this time every August, my wife and I head for the Berkshires to listen to music at Tanglewood, catch some theater at Shakespeare & Company, and hike these gentle hills and woods. We also treat ourselves to some of the local eateries.
This year, due to the pandemic, the cultural venues are operating at about half capacity and so are the restaurants. We’ve heard more than one owner complain that they can’t get enough help—due to the damned government paying people not to work.
Except that it ain’t so. Arindrajit Dube, an economics professor at the University of Massachusetts Amherst, reviewing census data, looked at the 25 states that ended benefits early, in June. Dube found that the share of adults with a job in the states that cut benefits actually fell by 1.2 percent.
A recent piece by Reuters quoted business economists who came to similar conclusions.
“We find only a marginal effect” of the unemployment benefit cuts on labor supply and on employment, according to Gregory Daco, the chief U.S. economist at Oxford Economics. “As such, benefits discontinuation may end up doing more bad on the personal income ledger than good on the employment ledger of the economy.” Goldman Sachs economists echoed the findings.
Here in Western Mass, restaurant owners when pressed will admit that much of the scarcity of help this year is actually the result of pandemic uncertainty scaring off college students, who usually make up much of the summer waitstaff. Last spring, when it was not clear what would open and for how long, college students were understandably hesitant to commit.
It’s true that local restaurants are now having to pay more to attract help. One owner indignantly told me that he was paying $15 an hour.
Well, yes. Isn’t that the point of unemployment comp in the first place—to prevent unemployed people from having to work at desperation wages?
