Yesterday, Secretary Steven Mnuchin informed CNBC that as soon as the Senate gets back from break, he and colleagues will get to work on a second stimulus installment to be sent by the IRS between the 20th and the end of the month.
The first phase of the COVID-19 relief bill extended unemployment benefits for workers who were terminated during the pandemic.
It’s still too early to say what the pillars of a second stimulus payment will look like because lawmakers want to reassess the state of the economy and job growth before finalizing the legislative language.
Currently, out of work Americans are eligible for their standard state benefit alongside an additional $600 per week from the federal government. Unless Congress meets again, this expansion will expire on July 31st.
Although the benefits authorized in the CARES ACT provide most terminated workers with more money than their wages did, a new paper published in the Chicago Federal Reserve found that this demographic is more likely to search for work while they’re still receiving financial assistance. The inverse was also determined to be true as well.
“Our research shows that the unemployed exert a high level of effort to find work. This is especially true for those receiving unemployment insurance benefits. Those who have exhausted their unemployment benefits search less intensely for work, but are also willing to accept work that pays considerably less than their prior job,” the authors wrote in the report. These results challenge the notion that collecting unemployment benefits reduces job search. Those collecting UI benefits actually search the hardest among all the groups we studied. If anything, search effort declines once individuals exhaust their benefits.”
After measuring the median number of hours participants spent searching for work a week, and the number of job applications they sent in the past month the researchers more specifically concluded that those currently collecting benefits search for work more than twice as intensely as those who have “exhausted their benefits.”
Time proved to be instructive of the degree to which participants seek work. It might not be that those receiving benefits are more proactive in regards to finding employment, but that their momentum declines steadily over time.
“The longer people are unemployed, the less they tend to search, and the exhaustion of UI benefits may cause a jump in just how discouraged people are about finding work, leading them to exert less effort on it. “Noting that recent research from the French labor market found a similar dynamic,” Jason Faberman, senior economist at the Chicago Fed explained in a release.
This same escalating apathy also sees workers who have exhausted their benefits accept low paying jobs, compared to workers who are still receiving benefits who tended to secure more highing paying positions on average.
As previously reported on by Ladders, stimulus checks failed to inject liquid into dying markets. Americans who qualified used their checks to cover household expenses, saved it for rainy days or purchased durable goods.
This past May was the best month for job growth ever recorded in The Bureau of Labor Statistics’ eighty-year history.
Unfortunately, because workers were incorrectly listed as “employed but not at work,” as opposed to unemployed on temporary layoff in census reports, unemployment rates are actually higher than previously suggested.
When assessed correctly, the unemployment rate in the U.S was actually around 19.2% in April and 16.1% in May (excluding seasonal adjustments).
Be sure to check out our list of the industries experiencing the highest job growth statistics according to The Bureau of Labor Statistics.