New Yale Study: 'No Evidence' Expanded UI Discourages Return to Work

August 3, 2020
Press Release

More than 54 million workers have filed initial jobless claims since the middle of March and tens of millions of Americans remain unemployed still today.  And yet, last Friday, President Trump and Senate Republicans abandoned the millions of jobless workers struggling to pay their rent, put food on the table, and otherwise financially survive the coronavirus pandemic that has pushed our economy to the brink of recession when they let the expanded unemployment insurance benefits helping millions of families lapse.  

Trump Treasury Secretary Mnuchin, along with many Congressional Republicans, falsely claim that the $600 per week in pandemic unemployment benefits that millions of jobless workers have been receiving are too generous and are a disincentive to going back to work.  

In fact, a new study released by Yale University last week showed just the opposite – finding “no evidence” that pandemic unemployment benefits were a disincentive to going back to work. From the study:

The CARES Act expanded unemployment insurance (UI) benefits by providing a $600 weekly payment in addition to state unemployment benefits. Most workers thus became eligible to receive unemployment benefits that exceed their weekly wages.  It has been hypothesized that such high benefits encourage employers to lay off workers and discourage workers from returning to work.

We find that that the workers who experienced larger increases in UI generosity did not experience larger declines in employment when the benefits expansion went into effect.  Additionally, we find that workers facing larger expansions in UI benefits have returned to their previous jobs over time at similar rates as others.  We find no evidence that more generous benefits disincentivized work either at the onset of the expansion or as firms looked to return to business over time.

In fact, if anything, groups facing larger increases in benefit generosity experience slight gains in employment relative to the least-treated group by early May.

 For eleven weeks, Senate Republicans have refused to take up the Heroes Act – a critical coronavirus relief package passed by the House in mid-May that included an extension of the $600 a week benefits keeping millions of families afloat – telling Americans and local economies teetering on the cliff to ‘just pause.’  But life doesn’t stop because Leader McConnell and the GOP don’t want to do their jobs.  Rent and mortgages are due.  Families need to eat.  Bills need to be paid.

 Time is of the essence, and Republicans must work with Democrats to help save lives and livelihoods now.