The $600 weekly boost to jobless benefits included in the CARES Act did little to discourage the unemployed from attempting to return to work, according to a study released Thursday by the JPMorgan Chase Research Institute.
Economists from JPMorgan Chase and the University of Chicago found no sustained increase in the number of people who returned to work after receiving unemployment benefits once the $600 weekly increase expired at the end of July.
Just 3.7 percent of people that returned to work after the $600 boost expired likely did so because they’d be receiving less money in jobless benefits, the researchers said. More than half of workers who received the $600 weekly boost returned to work before it expired, raising further doubts that the extra benefit convinced people to stay unemployed, a common statement by some critics of the increased aid.
“We find that the $600 supplement likely played little role in discouraging people from finding work. Rather, expanded UI boosted the spending and saving among jobless workers, many of whom are facing extended or repeated unemployment spells,” the researchers wrote.
The JPMorgan study contradicts concerns expressed by some Republican lawmakers that higher unemployment benefits would dissuade people from returning to work during the coronavirus pandemic. Economists broadly agree that generous unemployment benefits are crucial to supporting struggling households and the broader economy with many sectors still hindered by the pandemic.
The study found that unemployed households spent 39 to 43 cents more per additional dollar of unemployment aid received. It also found that the income, spending and checking account balances of unemployed households rose sharply when the $600 benefit phased in and fell dramatically when it expired.
“These findings suggest that jobless benefits and supplemental UI payments played an important role in maintaining household spending and wider macroeconomic stability,” the researchers wrote.
Several expanded unemployment programs — including a scaled-down $300 weekly boost to benefits approved through a December aid bill — are set to expire on March 15. President Biden’s stimulus proposal would extend the weekly boost, a jobless benefit program for gig workers and contractors, and additional weeks of benefits through the end of August.
While most economists expect the U.S. to rebound sharply once the coronavirus pandemic is controlled, many have expressed concerns about the deep damage it caused, particularly for families least able to afford it.
More than half of all jobless workers in October had been unemployed for at least six months, according to the JPMorgan study. Those suffering from long-term unemployment often find it harder to land a new job than other applicants.
The coronavirus recession has also taken a disproportionate toll on service sector workers, who have relatively lower incomes and wealth and have faced longer spells of unemployment than other workers.
Those who lost their jobs in 2020 started the year with less than half of the liquid assets and checking account balances of those who did not, the study found.