Do Jobless Benefits Deter Workers? Some Employers Say Yes. Studies Don’t.
A $600-a-week supplement that expired in July has been credited with bolstering the economy. Its impact on hiring is central to a political fight.
Lorrie Jackson sorting parts at Clips & Clamps, a Michigan company that was flooded with applications for an opening last year.Credit…Sylvia Jarrus for The New York Times
By Patricia Cohen
When Clips & Clamps, a metal forming company in Plymouth, Mich., advertised for a die setter and operator last year, more than a hundred applications came sailing in.
This summer, the company sought to hire another operator, offering $17 to $22 an hour and benefits. After three months, not a single person had responded.
“I received zero applicants,” said Jeff Aznavorian, the company’s president. “I’ve been dumbfounded.”
Mr. Aznavorian, whose grandmother founded the company 66 years ago, has no clear explanation for his hiring troubles. In the Detroit area, there should be plenty of qualified candidates, he said. And Michigan’s unemployment rate was 8.7 percent in July, more than double what it was last summer.
“I’m guessing it has something to do with the extra benefits associated with unemployment,” he said.
The $600-a-week jobless benefit supplement that Congress approved in March as part of the CARES Act has been widely credited by economists with keeping the economy functioning through the coronavirus pandemic. Households used the extra cash to pay rent, buy food and cover medical, utility and credit card bills when many businesses abruptly shut and cars lined up for miles at food banks.
With the supplement, which ended in July, most unemployed workers got more than they had earned in wages; without it, they fell short of their previous income. So did the supplement simply provide a lifeline, or did it discourage people from taking jobs?
The answer has consequences for tens of millions of Americans, particularly those on the lower end of the income ladder; for businesses trying to restore their operations; and for an economy that largely depends on the lifeblood of consumer spending.
There has been striking agreement among conservative and liberal economists who have studied the issue that the $600 supplement has deterred few workers from accepting a job. But the relief is not only a matter of contention among business owners; it is also at the center of an acrimonious debate in Congress that has held up agreement on a new aid package.
Democrats insisted on extending the full $600 payment beyond July, while Republicans pushed for no more than $200, arguing that the extra income deterred people from working.
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