Remember when conservatives thought that slashing unemployment benefits would help people find jobs and reduce their dependence on the government? Not surprisingly, they were dead wrong. A recent EPI report shows that cutting benefits not only didn’t save states money, but it also didn’t do anything to help reduce unemployment.
In 2013, eight states reduced the number of weeks for which people were able to receive jobless benefits. North Carolina took the cuts even further by reducing the amount that recipients were paid each week. This made them ineligible for the national Emergency Unemployment Compensation system, making it even harder for North Carolinians without jobs to get back on their feet.
But their politicians didn’t seem to be too concerned about them.
“What this really should be called is a re-employment rather than an unemployment bill,” said Republican state senator Bob Rucho, who sponsored the measure. “We’re trying to put North Carolinians back to work.”
Republican governor Pat McCrory concurred, claiming that the reductions were the “lone factor … [that] has helped North Carolina lower its unemployment rate drastically” in comparison to other states.
But the EPI report finds that the cuts in these states actually “did very little to change their fiscal condition.” They did hurt those still looking for work, however. Unemployed workers lost an average of $252 per week, while states only saved 37 cents per covered worker.
The shortened benefits didn’t improve unemployment in these states, either. The study found “no visible improvement” in the employment of workers ages 25 to 54. It also found that even North Carolina’s particularly severe cuts to unemployment insurance led to no visible job growth.
These cuts affected African-Americans the most, as they make up a larger share of workers in the eight states that shortened the length of unemployment benefits than in the rest of the country. As the study points out, African-Americans are “largely overrepresented among the long-term unemployed.”
The EPI report concludes that “states that decided to cut the available duration of jobless benefits appear to have made a political decision more than a fiscal one.” It dismisses these states’ arguments that “extended unemployment benefits are to blame for extended high unemployment,” because there is no proof that increasing the number of weeks that people receive aid makes them less likely to search for jobs. Instead, these states are still struggling with unemployment because employers aren’t able to hire as many workers. The EPI suggests that, in the future, states should do a better job of funding uninsurance trust accounts when the economy is doing well, so they’re better prepared when the unemployment rate goes up.
“There’s no evidence of any benefit to reducing the length or dollar amount of unemployment insurance when the economy is so weak,” EPI Research and Policy Director Josh Bivens said in a press release. “It’s hard to understand why states would shoot themselves in the foot like this.”
You can read the full EPI report here.
Photo: James Willamor via Flickr
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